The announcement that several high-profile TFL renewal projects – including vital repair work on the London Underground – is further proof that IR35 is harming the contractor industry and public sector, says Qdos Contractor’s Seb Maley.
This week, TFL has revealed that a “significant number” of contractors have pulled out of public projects as a result of IR35’s updated rules, which potentially see many flexible workers become responsible for their own income tax and National Insurance Contributions.
This has in turn lead to severe skill shortages, particularly when it comes to specialist welding contractors, and significant delays to projects critical to the health of London’s transport networks.
HMRC has vehemently denied that reform to IR35, intended to catch out “tax cheats” who use umbrella companies and other mechanisms to avoid income tax, has led to contractors quitting the public sector.
The Revenue’s tax assurance commissioner, Jim Harra, said: HMRC has been monitoring this. Contractors come and go, and the market is naturally fluid, but it would be wrong to suggest that the public sector has significant recruitment gaps because of this reform.”
Many surveys of the industry and contracting workers have found that many are prepared to leave public contracts if they find themselves under IR35’s purview, however.
Qdos Contractor’s CEO, Seb Maley, said: “That HMRC adamantly denies any public sector skills shortages because of reform is hugely worrying, particularly when public sector organisations are beginning to speak out too.
“The success of vital public sector projects rest heavily on contractors. It’s therefore essential that accurate IR35 decisions are made.”