An employment expert has slammed a UK Government report into the short-term impacts of loathed IR35 reforms.
Chief executive of consultancy Qdos, Seb Maley says the research “fails to tell the full story” of the off-payroll working changes, rolled out in 2021.
While the study “paints a nice picture”, he believes it is wildly misleading, and doesn’t illustrate the real impact of IR35 on contractors and businesses.
Last year, HM Revenue and Customs commissioned IFF Research to carry out an investigation into the impacts of the controversial changes.
Between November 2021 and April 2022, the agency carried out 353 quantitative interviews, 285 interviews with establishment-level organisations and 68 with group-level organisations, and 39 qualitative interviews.
Its research has been collated into a report, published by the UK Government on Thursday.
According to the study, half of “group-level organisations” found it quite easy or very easy to comply with the working rules.
In terms of recruitment, most businesses indicated that IR35 has not had any impact on their ability to enlist contractors.
But Mr Maley says the study simply serves to suit the “government’s narrative”, and that the reality is very different.
He said: “This research fails to tell the full story of IR35 reform. Read this report and you’d think that the off-payroll rules have been plain sailing. It’s another government study to add to the growing pile of those which fail to reflect the reality of the situation.
“We’re being told that half of businesses have found it easy to comply with the off-payroll rules and that around eight in ten firms assess IR35 status on a case by case basis. These statistics paint a nice picture, but I would take them with a pinch of salt. True, more businesses are getting to grips with these rules, but it’s been a difficult journey.
“The fact of the matter is that this study conveniently suits the government’s narrative around the off-payroll working rules, which is that there has been minimal disruption.”
An acknowledgement of the complexity of the current IR35 rules came from government itself earlier this year, when the then-Chancellor Kwasi Kwarteng pledged to scrap them
Any joy proved to be short lived though, and his successor, Jeremy Hunt, subsequently confirmed that the reforms would be remaining in place.
Due to the frequent use of contractors in the oil and gas industry, IR35 has had a big impact on contractors and firms alike.
Implemented in 2021, with a years delay due to Covid, the changes put the responsibility on firms to decide whether personal service companies, or freelancers, were actually used as regular employees.
If they are deemed to fulfil a role more akin to a full time worker, they are known as inside IR35, meaning they have to pay a higher level of tax.
Businesses face hefty fines if they are found to not be IR35 compliant, and the intricacy of the rules has led many to cut their use of contractors.