FCDO’s IR35 contractor assessments more than double, sparking fresh criticism
The Foreign, Commonwealth and Development Office reports that the number of IT contractors deemed inside IR35 rose from 243 to 441, prompting tax advisers to question the department’s handling of the rules.
The Foreign, Commonwealth and Development Office’s 2025-26 report shows a sharp rise in the number of IT contractors classified as inside IR35, jumping from 243 in the previous year to 441 after a comprehensive review. The FCDO voluntarily informed HMRC of the reassessments and has provisioned an estimate for the resulting back-dated tax owed. Tax adviser Dave Chaplin of IR35 Shield highlighted that the department’s reliance on HMRC’s CEST status tool has declined by about 70 percent, complicating compliance.
He argued that the public sector’s difficulties in applying IR35 undermine the government’s own expectations for private employers. The ongoing HMRC review of its interpretation adds further uncertainty for departments still grappling with the rules.
Why it matters
It shows how government departments are struggling to apply tax rules that affect thousands of freelance tech workers.
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