Parts of the public sector have been in recovery mode since the confirmation in last week’s Autumn Statement that the proposed IR35 reforms would, as feared, become a reality.
It’s clear that contractor presence in the public sector may be altered irreversibly going forward, and IPSE chief executive Chris Bryce has been quick to call for workers in the sector to take stock.
In a series of comments originally posted in an article for Contractor Calculator, Bryce was quick to stress his view that the reforms could have ‘a potentially devastating effect on public sector contracting’, and said that the reforms will ‘fundamentally shift the way in which people engage with the contract sector.’
Bryce said: “There may well be a migration away from the public sector as a result of these changes. Clearly, we can’t advise people on how they engage with their clients. But from the research that we’ve done, we’ve already encountered plenty of individuals who are unwilling to contract in the public sector. We believe there is a serious risk that this trend will proliferate as a result of the reforms.”
IPSE has confirmed it is doing what it can to support members that want to work as contractors in the public sector, with the organisation currently taking legal advice.
“We are also examining ways in which we can help public sector bodies continue to engage contractors on a business-to-business basis, and we are fully committed to backing any contractors who are willing to test this legislation in the courts,” Bryce said.
Bryce also expressed his dismay at the fallout from the Autumn Statement regarding the VAT rate for many contractors using the VAT Flat Rate Scheme, which is set to rise to 16.5% in April 2017.
He was also less than impressed with some of the ways contractors were portrayed within the statement. He said: “What we found particularly disappointing was that the only time the Chancellor mentioned self-employment, he mentioned it in connection with tax avoidance. We feel that Government needs to recognise that the vast majority of contractors are doing so because they want to be in business, and that they are not doing so as a tax avoidance mechanism.”