The predicted difficulties that organisations in the public sector would face following the IR35 reforms are rather ignominiously coming to the fore.

Transport for London – better known as TfL – has openly admitted in an investment programme report this week that some of its plans have been disrupted by walkouts from contractors who had been hired for projects.

Very much a cornerstone of life in London, TfL’s services are used by hundreds of thousands of people every day. With the government looking to maintain and enhance transportation around the capital, the list of projects that TfL has is significant.

But unfortunately some have hit hurdles, and the much-maligned, vilified and illogical reforms HMRC has made in the public sector, which saw many organisations cast a blanket across all contractors and deem them to be inside IR35, have had a negative impact.

TfL’s report includes the line: ‘A significant number of critical weld project employees left TfL as a result of IR35 – a revised tax legislation affecting public sector contractors. We are currently working on mitigations to reduce the impact on the project.’

Warnings that projects would be severely disrupted by contractor walkouts resulting from HMRC’s reforms when they came into play were ignored. And TfL’s acknowledgment that they are having an impact may just be the tip of iceberg. They could be one of many public sector organisations having to eat a slice of humble pie over the coming months, as initial targets are missed due to a lack of resources caused by the contractor exodus.

Those initial warnings weren’t just given for the sake of it. If, as has been rumoured in certain quarters, the government is considering introducing such reforms to the private sector as well, they’d do well to heed the warning TfL has issued this week.

Contractors won’t simply sit and watch as their working conditions get tampered with, and TfL has now found that out to their dismay. Surely other organisations will want to avoid a similar fate.

Should you want some peace of mind, we offer a full contract review amongst other services to help you prepare for IR35. We’ll give a pass or fail based on the current contract you hold, along with comprehensive comments on how to improve any problem areas.

We also offer IR35 investigation insurance, plus representation from our Head of Tax and resident IR35 expert Andy Vessey ATT should it go to tribunal.

For any further information or advice, please call us on 01163 800 400 or drop us an email. Alternatively, take a look around our Knowledge Hub for more IR35 advice, industry news and contractor guides.