IR35 special report: 10 years that shook the world of UK contractors

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Among the sometimes surprising facts to come out of ContractorCalculator’s new IR35 special report on the past, present and future of IR35 is that the controversial tax law has actually brought some benefits to UK contractors.

In recognition of the fact that IR35 has helped shape modern contracting, for better or worse, ContractorCalculator has commissioned a special report to mark the 10th anniversary of IR35. It contains expert analysis, a historical perspective, essential guidance for contractors, and a look at what the future might hold. This 36 page PDF report can be downloaded here.

The report includes specially commissioned articles with unique insights from some of the contracting services sector’s biggest names. ContractorCalculator CEO Dave Chaplin launched ContractorCalculator, then ir35calc.co.uk, ten years ago this month. So, he explains, he commissioned the Special Report to send a strong message that the contracting sector has matured and strengthened despite IR35. “Not only that,” says Chaplin, “but as the core component of UK PLC’s flexible workforce, contractors have the potential to lift the economy out of recession. The UK is lagging behind its global economic peers by remaining in recession,” explains Chaplin, “and it is the massive burden of business taxes and regulation, like IR35, that is now holding back the UK’s economic growth.”

It is the massive burden of business taxes and regulation, like IR35, that is now holding back the UK's economic growth.

Dave Chaplin, CEO - ContractorCalculator

But IR35 hasn’t all been bad news for contractors. As Chaplin points out, the Special Report highlights that IR35 has had a silver lining. “Before IR35, contractors did not have representation or any sense of group identity,” he says. “But when the government introduced this poorly thought-through and appallingly implemented piece of legislation, with no genuine consultation or impact assessment, contractors for the first time banded together to fight the assault on their livelihoods.”

In the report, 10 of the UK contracting sector’s foremost service suppliers answer ten questions about the history, impact and future of IR35, with often surprising results. For example, an expert independent financial adviser (IFA) explains that: "IR35 had some unlikely positive side effects, as many contractors have now built-up significant pension nest eggs as a result. “But”, says the IFA expert, “when the developed world was depending on contractors from the IT contracting sector to pull it back from the precipice that was the millennium bug, the all-out assault by the Treasury and HMRC was being planned.” And that assault was IR35.

IR35 had some unlikely positive side effects, as many contractors have now built-up significant pension nest eggs as a result.

IFA expert

Although the risks of IR35 to contractors’ financial health is better understood now than ten years ago, and a specialist service sector has risen to the challenge of supporting contractors, HMRC has been granted increased powers that will impact on contractors’ livelihoods. “The ContractorCalculator IR35 Special Report is designed to remind us of how damaging bad legislation can be,” says Chaplin, “and as a tool to educate current and future legislators about contractors’ needs. IR35 is likely to remain with us in one form or another for some years,” he says. “But contractors will always show their ability to overcome any obstacle, provide creative solutions and thrive against all odds!”

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Published: Monday, November 02, 2009

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