"After 18 years of contracting, I was forced to take an inside IR35 role due to risk-averse, often misguided corporate policies."
That is a direct quote from a contract programmer this week, speaking to ContractorUK about the state of IT contracting in 2026. He is not an outlier. A Qdos survey of 600 freelancers published in the same week found that 25% cited a lack of outside IR35 roles as their single biggest concern. Not tax. Not finding clients. The absence of organisations willing to assess their engagements properly.
For HR and talent leaders trying to attract specialist contractors, this should be uncomfortable reading. Because if your organisation operates a blanket "inside IR35 only" policy, you are not reducing risk. You are transferring it — straight into your talent pipeline.
What the Data Actually Shows
The Qdos survey paints a clear picture of contractor sentiment heading into 2026. Alongside the 25% concerned about outside IR35 availability, 24% cited finding work at all as their primary worry, and 22% pointed to tax increases. Over half — 54% — want a full reversal of the off-payroll working reforms.
That reversal is not coming. The government has not even launched the employment status consultation it promised two years ago. The rules as they stand are the rules for the foreseeable future.
But within those rules, there is a meaningful difference between organisations that assess each engagement individually and those that apply blanket determinations. Contractors know the difference. And they are voting with their feet.
The best specialist contractors — the ones with genuine outside IR35 working practices, their own client bases, and real commercial risk — will not accept an inside IR35 determination they know to be incorrect. They will move to an organisation that takes the time to assess properly. The contractors who remain are often those with fewer options, not those with the strongest expertise.
The False Economy of "Safer to Put Everyone Inside"
The logic behind blanket inside IR35 policies is intuitive. If every contractor is determined to be inside IR35, the organisation cannot be accused of incorrectly classifying someone as outside. No outside IR35 determinations means no risk of HMRC challenging those determinations.
It feels safe. It is not.
A blanket approach carries its own costs, and they compound over time:
- Talent attrition. Experienced contractors with genuine outside IR35 arrangements leave for organisations that assess fairly. You lose the specialists who are hardest to replace.
- Rate inflation. Contractors who accept inside IR35 roles typically increase their day rates by 20-30% to compensate for the reduction in take-home pay. The "savings" from avoiding outside IR35 engagements are often absorbed by higher rates.
- Reduced flexibility. Blanket policies limit your ability to engage specialists for short-term projects on terms that suit both parties. The contractor market becomes narrower, not wider.
- Workforce planning blind spots. When talented contractors leave, they are often replaced through informal channels — line managers finding workarounds, procurement engaging consultancies, specialist work being wrapped in services agreements. The workers do not disappear. They become invisible.
Why HMRC Does Not Like Blanket Bans Either
Here is the part that often surprises organisations relying on blanket policies: HMRC has explicitly stated that blanket determinations do not demonstrate reasonable care.
DavidsonMorris, in their recent analysis of IR35 obligations for medium and large organisations, framed compliance as a "core HR, finance and governance responsibility." Central to that responsibility is making individual, case-by-case assessments based on the actual working practices of each engagement.
A blanket determination — whether inside or outside — signals the opposite. It signals that you have not examined the specific circumstances of each arrangement. It signals that you have applied a policy decision rather than a genuine assessment.
If HMRC investigates and finds that every contractor in your organisation has been determined inside IR35 without individual assessment, that is not evidence of caution. It is evidence of a governance failure. The reasonable care defence — which protects against penalties even when HMRC disagrees with specific determinations — depends on demonstrating that you applied a genuine, consistent process.
A blanket policy is not a process. It is the absence of one.
The April 2024 Change That Many Organisations Missed
There is a practical reason why blanket bans made more sense before April 2024 than they do now.
Prior to April 2024, if an organisation determined a contractor as outside IR35 and HMRC later disagreed, the organisation faced the full tax liability — even if the contractor had already paid income tax on those earnings through their PSC. This created a genuine double taxation risk that made outside IR35 determinations feel financially dangerous.
The offset legislation changed that. HMRC must now account for tax and National Insurance already paid by the contractor or their intermediary when calculating any liability. If a contractor has been paying tax on their earnings, that amount is offset against what the client owes.
This materially reduces the financial risk of a genuine outside IR35 determination that is later challenged. The exposure is no longer the full tax bill — it is the difference between what was paid and what should have been paid.
Many organisations have not caught up with this change. They are still operating blanket policies based on a risk calculation that no longer applies.
What "Doing It Properly" Looks Like
Individual assessment does not mean individual chaos. It means having a consistent, documented process that is applied to every engagement. The organisations getting this right share common traits:
- They assess based on actual working practices. Not just contract terms. They gather information about how each engagement genuinely operates — who controls the work, whether substitution is possible, what financial risk the contractor bears.
- They document their reasoning. Each determination has a clear rationale that can be explained and defended. This is the foundation of the reasonable care defence.
- They communicate clearly with contractors. Status Determination Statements are issued with explanations. Contractors understand why a determination was reached and have a genuine route to challenge it.
- They review regularly. Engagements change over time. A determination made at the start of a contract may not reflect how the working relationship has evolved twelve months later.
- They own the process centrally. Determinations are not left to individual hiring managers or delegated to recruitment agencies without oversight. There is a clear governance framework with accountability.
None of this is unachievable. It requires commitment, not complexity.
The Competitive Advantage Most Organisations Are Missing
The contractor market in 2026 is shaped by anxiety and frustration. Qdos describes it as a "rock and a hard place." Accept inside IR35 and take a significant hit on take-home pay. Hold out for outside IR35 and risk sitting on the bench.
In that environment, the organisations that offer fair, transparent, individually assessed engagements stand out. Not because they guarantee outside IR35 outcomes — no responsible organisation should do that. But because they demonstrate that they will assess each engagement on its merits and reach a defensible conclusion.
That is not just compliance. That is a talent strategy.
When a specialist contractor has a choice between an organisation that will assess their engagement properly and one that applies a blanket ban regardless of the actual working arrangement, the decision is straightforward. The best contractors go where they are treated fairly.
For HR and talent leaders competing for scarce specialist skills, this is the question worth asking: is your IR35 approach attracting the contractors you need, or is it quietly pushing them towards your competitors?
Key Takeaways
- Blanket bans are driving away talent — 25% of freelancers cite lack of outside IR35 roles as their top concern in 2026
- HMRC does not view blanket determinations as reasonable care — they demonstrate a lack of genuine assessment, not an excess of caution
- The April 2024 offset legislation reduced financial risk — tax already paid by contractors is now offset against client liabilities, making outside IR35 determinations materially safer
- Fair assessment is a competitive advantage — organisations that assess individually attract stronger specialist talent than those with blanket policies
- Proper compliance is achievable — it requires documented process, individual assessment, and regular review, not complexity
What This Means for Your Organisation
The best contractors go where they are assessed fairly. If your organisation has been operating a blanket inside IR35 policy since 2021, it is worth revisiting that position — not because the rules have changed, but because the risk calculation has.
The offset legislation has reduced client-side financial exposure. HMRC expects individual assessments as evidence of reasonable care. And the talent market is actively punishing organisations that refuse to engage with the process.
The question is not whether you can afford to assess each engagement individually. It is whether you can afford not to.