The freelance contractor sector and its representatives have issued a warning to the UK Government not to extend IR35 reforms into the private sector. The changes have already proved controversial in the public sector.

The Government has just finished its consultation on how to clamp down on the way that contractors operate in the private sector, resulting in multiple concerns about the extension of IR35 changes.

The aim of the consultation was to introduce similar reforms to those that have already taken place in the public sector. The result of such changes would place a greater administrative burden on UK companies, complicate employment law and reduce productivity.

Another major concern involves pushing IR35 reforms onto the private sector at the same time that it has to cope with the changes brought about by Brexit. These could damage the economy when the flexibility provided by contractors would be necessary more than ever.

IPSE, a contractor group, raised concerns over the reliability of HMRC’s Check Employment Status for Tax (CEST) tool, which has been heavily criticised.

Andy Chamberlain, Deputy Director of Policy at IPSE, said: “Extending the changes to IR35 to the private sector would be extraordinarily short-sighted – especially now. If you believe many economists, the UK is already staring into a Brexit-shaped abyss. Why would the Government want to introduce a measure that will damage one of our greatest competitive advantages: our flexible economy?”

The Association of Taxation Technicians (ATT) has also called for the extension of “off-payroll” working rules into the private sector to be either dropped or deferred.