IR35 policy changes have effectively banned SMEs from working with government, according to Brightman director Romy Hughes.
Hughes said that before 6 April 2022, Brightman was in trouble when a government agency and long term client instigated a blanket ban on working with SMEs due to their fear of IR35 enforcement action by HMRC. They were unable to approve budgets with any SMEs in their supply chain, despite these companies already being engaged in extensive, multi-year digital transformation activities.
The client did not want to terminate these contracts and the sudden termination of these projects would have been disastrous for both the organisation and its broader transformation ambitions. The whole scenario made no sense to anyone, but was being promoted from those further up the chain due to fears of making an error in their IR35 determinations.
“This was not an isolated incident, but a broader issue affecting many other public sector organisations and the professionals that work in them. It was an unofficial change of government policy, with significant ramifications for the sector and everyone it served (i.e., every taxpayer and recipient of public services)”, Hughes said.
