A message from our CEO: IR35 and the future of contracting

Qdos CEO, Seb Maley, speaks frankly about IR35, reform, and the future of contracting

In a recent open letter to the market, Qdos CEO, Seb Maley, assesses the contracting landscape reflecting on the past two decades, and explores the important role of contractors in economic recovery:

 "Next month, the Qdos team will start returning to the office after 6 months of remote working, to a new home alongside our parent company, Tokio Marine HCC. As we begin this new chapter in the Qdos story, I write this letter - at a time when UK contracting is under considerable pressure - to reflect on the resilience of the industry.

I joined Qdos over 17 years ago, when IR35 enquiries were at their peak and the contractor arm of the business was only a small part of a wider tax, HR and legal company. Since then, we have grown alongside the UK’s contractor population, becoming one of the most trusted IR35 experts, that now has the support of global insurer, Tokio Marine HCC, who had underwritten our policies for over 12 years prior.

In these years, the industry has experienced its fair share of challenges in addition to IR35 - most notably the MSC legislation, the recent Loan Charge and presently, COVID-19. But it is IR35 that has remained a persistent threat to contractors.

Since its arrival in 2000, the IR35 legislation itself has remained unchanged. The introduction of the quickly abolished Business Entity Tests and the creation of the IR35 Forum were perhaps the most if not only newsworthy changes made until IR35 reform in the public sector was enforced in 2017.

As you’ll likely know, controversial changes to the off-payroll working rules will be rolled out in the private sector on 6th April 2021. The reform will see medium and large businesses tasked with determining IR35 status. The IR35 risk will also be shifted away from the contractor to the fee-paying party, mirroring public sector changes.

This means IR35 is no longer a consideration only for contractors. Like in the public sector, it poses a significant risk to firms engaging these workers and the agencies that place them. 

It’s no secret that a number of businesses are taking a risk-averse approach to the changes. Some will or have insisted contractors work through umbrella companies where IR35 doesn’t apply. Others, in extreme cases, are leaving contractors with no option but to become employees

These are both short-sighted reactions to IR35 reform - ones that will see businesses sacrifice the flexibility, skills and savings enjoyed when compliantly engaging genuine contractors outside IR35 - an arrangement which, contrary to speculation and in some cases, scaremongering, is achievable despite reform. 

With the clock ticking towards April 2021, I cannot stress enough how important it is that these businesses reevaluate their position. Whether financial services, oil and gas firms or technology companies, organisations of all sizes and across all industries need the agility that contractors enable - perhaps more than ever in this economic climate. 

Do not ban contractors. Do not force them onto the payroll. Do not make needlessly risk-averse policy decisions in response to IR35 reform.

Of course, many businesses do recognise the importance of contractors. These organisations are quietly preparing for IR35 reform, implementing processes so they can assess IR35 status accurately. In my opinion, they don’t receive the praise they deserve. 

I know, from the work we carry out at Qdos, that at least 2,200 businesses are taking a pragmatic approach. These firms will be ready to compliantly place and engage tens of thousands of contractors outside IR35 after April 2021.

IR35 reform is an event that we have been prepared for here at Qdos for some time - well before public sector changes were enforced. As one of very few genuine IR35 experts, we have specialised in this legislation since its introduction in 2000, defended over 1,600 IR35 enquiries and carried out over 150,000 IR35 status assessments.

I am hugely proud of our team and achievements as a business - whether that’s pioneering IR35 insurance with our Tax Liability Cover in the early 2000s (which has so far insured over 60,000 contractors against IR35) or developing the first and most comprehensive support service in response to the off-payroll rules.

The Qdos Status Review facility is a unique end-to-end offering trusted by thousands of organisations - from Government departments and major public sector bodies to FTSE 100 businesses. 

It’s our first-hand experience and in-depth understanding of IR35 that gave us the tools to develop a service built to help businesses compliantly manage off-payroll reform, retain contractors and protect themselves from the risks of IR35.

As the economy enters uncharted territory, facing up to the challenges of both a recession and Brexit, there’s no denying that contractors have a central role to play in the recovery. These workers are highly-skilled, flexible, enable business agility and, crucially, stimulate growth. 

With IR35 reform just months away, after businesses were given 12 more months to prepare, the contracting industry finds itself at a critical juncture. The private sector must think carefully and act sensibly. Businesses need contractors, IR35 reform can be managed, and here at Qdos, we are here to support you.

My advice to contractors is to remain resilient, explore ways to safeguard your IR35 status and take heart from the fact that these changes are manageable - even if this is not the impression your client or agency has given you. 

I can assure you, in the months leading up to 6th April 2021, and beyond that, myself and the expanding team at Qdos are committed to working tirelessly to help protect you and in turn, one one of the UK’s greatest assets - the independent workforce."