Majority of contractors distrust HMRC's IR35 calculator, survey finds

Turkeys voting against Christmas?

The vast majority of contractors do not trust the results of HMRC's online assessment tool determining them inside the IR35 changes, according to a survey by IT recruitment firm Qdos Contractor.

Of the 1,500 contractors questioned, 85 per cent said they did not trust the Employment Status Service (ESS) Tool.

However, surprisingly the survey found that 62 per cent of contractors have not seen any change to their IR35 status – just 31 per cent have had their IR35 status changed and 7 per cent have not had a determination.

As of last month it is now the responsibility of the public sector body to assess whether contractors are in compliance with the intermediaries legislation. The Treasury says it hopes to raise £185m for the year 2017/18.

Some departments have been accused of applying a blanket approach to the changes, ruling contractors within the parameters when they ought to be determined outside.

The IT contractors who built the UK tax collectors' IR35 tool to determine whether freelancers are in the scope of the new tax clampdown have themselves been ruled within the scope of IR35. However, The Register understands they have successfully appealed that initial ruling.

Qdos Contractor CEO Seb Maley said that part of the issue is that the tool is open to interpretation. "Public sector bodies are filling it out on behalf of contractors but do not understand some of the key questions, such as whether the role could be substituted."

Maley denied it was a situation of turkeys voting against Christmas. "We've worked closely with a lot of our contractors and know their situation well. Many are being ruled within the changes that should not be."

Dave Chaplin, chief exec of Contractor Calculator, said: "The Qdos results on HMRC's ESS tool are hardly surprising given that the only voice we've heard saying the tool is accurate is from HMRC themselves – and even they have apparently not stood by the result of their own tool when assessing the status of the contractors who were engaged on the project to build the tool."

When asked about the ESS Tool, one contractor said: "It's in a constant state of flux. I understand the advantages of Agile delivery, but if ever there was an example of something that needed to be finished before it was released, this is it. How can I trust that a decision that the tool gives me today will still be valid tomorrow?"

Another said: "They keep tweaking it, which constantly moves the goalposts."

One said although the tool might provide an indication, it doesn't take into consideration the unique circumstances of each contract.

"Since it was introduced it has changed many times. It's so difficult to get a definitive baseline. Not convinced," said another. ®

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