The Association of Independent Professionals and the Self Employed (IPSE) has warned the public sector to carefully evaluate the IR35 status of each contractor. If they fail to do the assessment cautiously, public sector clients risk litigation.
IPSE Chief Executive Chris Bryce said that last-minute amendments to the IR35 legislation should prevent public sector organisations from imposing a blanket status on their IT contractors and other contractors working through limited companies.
Bryce went on to add that if public sector bodies take “reasonable care”, as stated in the changes in the IR35 legislation, it would go a long way to ensuring that organisations do not take a blanket decision on their contractors. He said that a blanket decision either way is clearly not reasonable care, and public sector organisations should realise that.
There have been reports of several public sector bodies trying to impose blanket bans on contractors and limited companies. Also, several public sector organisations have tried to evade their compliance assessment responsibilities by forcing contractors to accept PAYE.
Bryce said that this move by the public sector is completely unprofessional and against the requirements of the new legislation. Above all, he feels that clients owe the contractors that they hire the reasonable care provision mentioned in the new IR35 rules.
Many contractors, including IT contractors, are walking out of public sector projects, but it is not certain at this point how many have taken this step, according to Bryce. This is primarily because the public sector is resorting to blanket IR35 status cover. The number of contractors leaving public sector projects is bound to adversely affect these projects.
Nonetheless, Bryce believes that the changes to the IR35 rules will ensure that the contractors who stay on receive adequate protection, as public sector bodies have to demonstrate that they have taken reasonable care while determining the status of a contractor.