Review of IR35 needed as under half of businesses unprepared

Just under half of the businesses still admit they are unprepared for the IR35 changes that will come in to effect in April 2020, with the Conservatives saying they would review the legislation during their election campaign.

Research conducted by the Association of Professional Staffing Companies (APSCo) found that 51 per cent of businesses are actively preparing for IR35.

In October, a poll conducted by MHR found that 74 per cent are not ready for the new rules that will be implemented in April 2020.

If the Conservatives promise to review IR35 actually leads to a change, it could provide a lifeline to the businesses who are unprepared for the changes to off-payroll working.

APSCo also found that 79 per cent of recruitment businesses believe that most of the companies they work with are aware of the approaching changes.

Over a third (38 per cent) believe contractors will be paid more following the new rules, this has increased from only 10 per cent believing this will happen in July.

Also, 70 per cent of recruitment firms said they do not believe contractors will agree to work ‘inside’ IR35 following April 2020.

Tania Bowers, general counsel at APSCo, said:

The countdown to the off-payroll working reform is now well and truly underway – but our latest data suggests that many employers are either unaware of the wider potential consequences of the changes, or simply burying their heads in the sand.

Irrespective of any review into the roll-out, which may be announced in the Queens Speech, clients should not be complacent given scale of this challenge. Businesses now have a few short months to get ready for incoming changes to IR35 legislation but it seems that many may be ill-prepared. Companies which haven’t already must urgently review their existing contingent workforces to determine what employment models individuals are working through to understand the extent of personal service company (PSC) contractor usage. They should then work with trusted recruitment partners to discuss which roles are likely to be in scope across different levels, and if individuals with these skills are thin on the ground or easily replaced, so that plans can be put in place to enable them to sustain and grow future workforces effectively. If we’ve learnt anything from the public sector roll out, it is that we are now entering a period of significant change. However, by working with expert recruitment partners, businesses can ensure that they navigate the new landscape easily.

In order to get these results APSCo, a professional body that represents the interest of recruitment organisations asked its 1,000 members in the UK.

Darius is the editor of HRreview. He has previously worked as a finance reporter for the Daily Express. He studied his journalism masters at Press Association Training and graduated from the University of York with a degree in History.