Limited Company contractors have been offered contracts that have a renewal date of March 31st, ahead of the off-payroll roll out on April 6th. This means that many contractors could find themselves placed inside of IR35 as soon as the roll-out date comes up.
For PSCs who have clients who have decided their determination regarding the new rules and have chosen to offer only inside IR35 contracts, these contractors are likely to find themselves being paid as if they are already caught by HMRC.
Some recruitment agencies are also advertising outside IR35 contracts that run until April 5th, without mentioning that they will turn to inside IR35 contracts as of April 6th. This disingenuous practice will likely lead to many contractors being caught inside of IR35 through no fault of their own.
Experts have stated that they see this more and more and that the trend is concerning. This means that many contractors could be affected and have no idea that they will suddenly be inside of IR35. This unfortunate practice, combined with blanket decisions that are still being made by major engagers, will likely lead to a lot of trouble for contractors as of the roll-out date.
Clients who are transitioning to an entirely inside of IR35 model will not be likely to disclose this, and contractors will need to do their own research about this for each of their contracts. Contractors are going to have to do their own research to be certain of each of their contracts after the roll-out date.
This situation has also revealed the possibility that some contractors will be told that they are outside of IR35 but will be paid like the inside of IR35 contractors. This means that contractors might also be incorrectly categorized and also paid incorrectly.
Compromises on the Horizon
This set of changes means that many contractors are being forced to work through an umbrella in order to remain a contractor. Many contractors feel that they have wasted years of their life trying to set up their own business to work outside of IR35, only to find that now there is no way at all for them to carry on in this fashion.
Contractors are also starting to feel that there is no point in getting their status assessed because it will likely change within the week. The CEST tools already don’t work, and there are limited options for contractors to assess their status.
There is some hope to be had with the recent decisions in the courts about Uber and the Adams case. These cases help to give some clarity to contractors about what defines their status, especially in more complicated contract situations.
Social media has become a means for contractors to connect and compare notes about which engagers are still making correct IR35 decisions as well as engaging contractors outside of IR35. This may be one of the ways in which contractors can navigate the bumpy road that is to come as April 6th brings with it a new and complicated world.
