Forcing staff into the IR35 regime will lead to a loss of skilled workers, study suggests

New research has revealed that employers risk losing out on the skills and flexibility of contractors if they fail to give them the opportunity to continue operating outside the IR35 legislation.

The research carried out by Contractor Weekly found that 72 per cent of the 1200 independent workers surveyed would stop working on a particular project if their client attempted to force them under the IR35 regime.

The study follows the news that HSBC, M&G Investments and Morgan Stanley are all preparing to stop working with contractors who operate outside of IR35 or who set up alternative engagement models which would mean these businesses do not need to administer the rules.

Although it is unclear of the exact policy, the research suggests that many operators may refuse to work for companies that enforce an ultimatum on IR35.

As an alternative, 18 per cent said they would continue working on a specific project but only through an umbrella company. Incredibly only 10 per cent said they would be happy to accept any offer to go PAYE and become an employee.

Along with the fact that 91 per cent of independent professionals said they take particular pride in working this way, that very few of these workers have the intention of entering employment is something that private sector firms must take into account.