New research has found that more than four in ten public sector contractors have hiked up their daily rates to overcome any losses incurred through IR35 costs.

According to Harvey Nash Recruitment Solutions’ poll of 500 contractors, 42 per cent have had to mitigate the added costs by charging more for their services in the 12 months since the reforms hit.

Compared with May 2017 – when only 16 per cent of contractors had managed to charge more to cover the IR35 gap – the new figure represents an improvement.

Despite the relatively high number of contractors who have been able to charge more, 43 per cent of the survey's respondents say that their tax bills have also shot up. A paltry 8 per cent said that HMRC had been on-hand to provide "reliable" support through the IR35 process.

Since April 2017, if contractors are decided by their end-client to fall within IR35, payments made to them via their agency cannot be gross and must include tax and NIC deductions.

Harvey Nash’s research also suggested that contractors were unhappy with the new state of play, however, with 90 per cent saying they were “stressed, worried or angry” about the impact of IR35 on their livelihoods.

“IR35 has created an uncertainty that hinders a contractor's business by impeding on its financial strategy,” the agency said.

“The levels of frustration, fuelled by the rudderless and sometimes contradictory IR35 forum meetings, have resulted in mistrust”.