Some 52.5% of contractors plan to leave their clients before the end of March 2020 when new IR35 rules into force from 6 April 2020. This was the result of a survey conducted by inniAccounts and published in February 2020.
From 6 April 2020, private sector employers will decide whether contractors are acting as employees. If so, they must be put on the payroll and have PAYE and national insurance deducted at source. This follows a similar move in 2017 in the public sector. That was also very unpopular.
The survey's main findings are that:
? Half of contractors and consultants will leave clients in next 8 weeks, leaving projects in disarray
? £2.2bn immediate cost to economy due to lost productivity ? 61% in banking, finance and insurance have seen regulatory projects at risk
? 74% in defence and aerospace have seen nationally important client projects at risk
? 47% have seen offshoring of work as a result
? 15% are set to default on mortgages or are in the process of selling homes
? 9.5% of those surveyed use contracting and consulting to overcome disabilities or health issues, or to give them flexibility as carers
? Fear of brain drain is widespread, which will lead to a short term and long term economic impact that could outweigh HMRC’s business case.
The full report can be downloaded from here. [20.02]