90 per cent of IT contractors in the UK will ‘turn their backs’ on the public sector if controversial reforms to IR35 are implemented by HM Revenue & Customs (HMRC), according to a new study.
The controversial reforms, which are currently the subject of ongoing debate under an HMRC consultation, aim to shift compliance responsibility from independent contractors in the public sector to their employers, public bodies and recruitment agencies.
HMRC hopes that the changes will raise approximately £400million through combating the increasing number of contractors it claims are failing to pay the correct tax under current IR35 rules.
Previous surveys conducted by HMRC found “general resistance” to the proposals, with employers branding such reforms an “unwelcome burden” and contractors themselves claiming to be “cynical” about their nature.
But a new study has found that up to 90 per cent of public sector IT contractors are likely to ‘jump ship’, should the reforms be implemented – either by switching to the private sector, or hiking up fees in a bid to offset costs, The Register has reported.
One in six contractors told surveyors that they would consider ‘giving up’ on contracting all together and returning to permanent work – while a further four in five said that they would ‘seek opportunities elsewhere’.
HMRC’s ongoing consultation into IR35 will close on 18 August.