85 per cent of IT contractors say they will quit the public sector should they be made to pay the same tax as employed workers, Computer Weekly reports.

The public sector could be vulnerable to a mass exodus of IT talent should the organisation they worked for decide they will be designated as ‘inside IR35’, research by QDos suggests.

The changes to IR35 legislation, set to be brought in on 6 April, will mean public sector organisations, not contractor companies or contractors themselves, will be responsible for deciding how contractors should be taxed.

Currently, it is beneficial for contractors to declare themselves as ‘outside’ IR35 so they are not taxed in the same way as on-payroll employees.

The poll of 2,000 contractors suggests the majority would simply leave the public sector if they were made to pay the same as salaried workers.

Nearly half – 49 per cent – said they thought activity in government departments would suffer if the changes do lead to an exodus.

“Whether it’s the NHS, HS2 or government departments for that matter, it’s fair to say that every public sector body or project will be worse off should there be a walkout,” QDos’ Seb Maley told Computer Weekly.

“The threat not just to the public sector, but UK contractors and agencies, which makes it all the more important that well-educated, expert decisions are made when it comes to setting IR35 status.

“Changes are a matter of weeks away, and HMRC’s tool for determining IR35 status has only just been released. Questions remain over its effectiveness and accuracy, and, put simply, people are still wondering what to do.”

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