What are clients & contractors saying about IR35?

IR35 is a complex topic that affects both end-user clients and limited company contractors. But how do these two key communities feel about the IR35 changes in the private sector, and how do your views compare to others? 

Read on, or check out our Video Blog to see what both clients and contractors are saying on the matter. 



We asked our contractors one simple question: “what actions are you likely to take in relation to the IR35 reforms?” Here’s what they had to say:

  • 15% thought they would be deemed outside of IR35
  • 8% said they would look for a permanent position
  • 10% said they would work abroad
  • 12% told us they would retire
  • 25% said that, if they were deemed ‘inside’ IR35, they would seek to achieve a rate increase to cover the tax rise
  • 27% told us that if they were deemed ‘inside’, they would find a different assignment that was deemed ‘outside’

This tells us that the vast majority of contractors believe they will be impacted, a quarter are expecting rate increases and nearly 50% would potentially leave their current assignment. As a result, clients risk an undeniable level of upheaval to their current projects.


Whilst many clients are taking the forthcoming changes seriously and getting ahead of the curve by deploying solutions, there are still a few who are yet to take action. One of the more worrying sentiments that came up during our research was “I can just deal with this in 2020.” 

The problem with this is that there is a lot of work to do in order to get ready for the reforms and, as of 6 April 2020, companies could be liable for unpaid tax and national insurance contributions in addition to the fines and interest on overdue payments.

In fact, if HMRC find that assignment are incorrectly determined as ‘outside’ when they are in fact ‘inside’, clients could be liable to pay charges amounting to 1.5x of the total amount paid to each contractor. This will likely be backdated to cover the full length of the assignment from 6 April 2020, up to a maximum of four years.

This means that, in 2024, clients could be liable to pay HMRC an additional 50% of your total contingent worker costs for the past four years, plus any fines and interest on overdue payments. 

To add to the financial risk, there are operational, reputational and legal risks that need to be managed.

Another dangerous assumption that clients are making is that they believe IR35 won’t be much of an issue, because of the current make-up of their workforce. However, it’s important to remember that this legislation extends beyond just April 2020, and any incorrect determinations could have serious implications if they get it wrong.

Finally, one of the most widely-adopted stances expressed in our poll was that contractors would have to simply accept an ‘inside’ determination and retain less income, which goes hand-in-hand with the opinion that contractors have been “getting away with it” for years.

Whilst a few contractors may fall into this category, our data suggests that the majority are currently operating within the correct determination. Therefore, such contractors should not be expected to accept changes to their current tax arrangements.

The reality of the situation is that many businesses depend on their contractor communities to deliver critical projects. Making an ‘inside’ determination and expecting contactors to stay whilst accepting reduced take-home pay could jeopardise this; especially if your competitors offer ‘outside’ assignments for greater pay.

How do I get ready for IR35?

There’s still time to prepare and ensure you’re compliant by 6 April 2020, but it is fast running out.

The first step is to educate yourself, so visit our IR35 Hub to find out more and get in touch with our IR35 experts.

On the Hub, you’ll find an Impact Assessment Tool which you can use to understand the effort required to get ready for the reforms. It’s free and only takes around five minutes to complete.

If you’re ready to start looking at solutions, our Hub will also tell you how Gattaca can help you begin your journey to IR35 compliance.

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