The off-payroll working rules are set to come into effect from 6 April 2020 and will affect medium to large sized organisations using contractors.

The 14 signatories to the letter represent the largest UK recruitment agencies, including Reed, Adecco, Hay and Manpower Group.

They claim the rule change, which will put many contractors onto company payrolls instead of being self-employed workers or working through personal service companies, will have a negative impact on 83% of businesses that use contractors.

The group would like to see the legislation delayed for one year to give the government and employers time to review the draft rules and ensure that their introduction does not disrupt business.

The issue has been exacerbated by the publication of draft legislation for consultation yesterday which did not even wait for the outcome of the government’s independent review announced at the beginning of January.

‘Making any necessary changes in 2021 would give space for a more detailed review and also grant government sufficient time to implement any suggestions from it - including effective enforcement,’ the group said.

‘The current timetable leaves only 17 working days between the publication of final legislation on March 11 and implementation on 6 April.’

The group is calling for a rethink of the rules and their application in the private sector, as well as an independent review of how the rules will work in practice.

Major businesses, including most of the banking sector, have already announced they will no longer engage contractors due to a lack of confidence in the legislation.

The letter from the agency chiefs added: ‘We can see that this policy requires a far more extensive rethink than the limited review set up recently on the back of your commitment during the general election campaign,’ the letter stated.

‘We agree that it is vital that people pay the right amount of tax, and that the system is fair. That is why we think you need to pause and think again on IR35 changes that risk poorer treatment of contractors and compliant companies losing out to those who bend the rules.

‘Our primary concern is that the effective regulation of umbrella companies government has promised will not be in place in time for April - creating huge opportunities for avoidance.

‘At the same time, compliant companies won’t have enough time to understand all the legislation given the significant delays that have taken place. Through no fault of their own, they will have insufficient time to work with their clients to get the approach right.

‘We are already seeing examples of projects being binned and work taken offshore, damaging growth here - and ultimately, the tax take.’

The government has no intention of backtracking on the rul.

A Treasury spokesperson told Accountancy Daily: ‘Our changes to off-payroll working ensure that individuals sitting side-by-side and doing the same work for the same employer pay the same tax and national insurance contributions.

‘We’ve consulted widely on the details of the reform since announcing in October 2018, and are now reviewing the reforms, working with stakeholders to see what further actions we can take to ensure their smooth implementation.’

The signatories include Recruitment and Employment Confederation (REC), Reed, Adecco, Harvey Nash, Hays, Impellam, Independent Clinical Services, Manpower Group, Morson Group, nGage, The Staffing Group, Randstad, Staffline, Best Connection Group and Pertemps. 

Agencies in the recruitment industry place a million people into temporary and contract work every day according to the group.