We have today been informed of email communications sent to contingent workers at one of the UK’s largest banks informing them they will no longer engage contractors operating via a Limited company or any other intermediary post April 2020. If other institutions follow suit, this may well signify the end of the Limited Company Contractor!
It is our understanding the communications were as follows:
‘The government is expected to change the way it applies the rules for off-payroll working from April 2020.
As a consequence, …we will no longer engage contingent workers who provide their services via a personal services company, limited company or other intermediary.
Instead, ..we will engage contingent workers on a PAYE basis only for new or renewed contracts.
From October, we will not extend contingent workers who provide services via a personal service company, limited company or other intermediary beyond the end of February. Where contingent workers continue to work beyond the end of February, they can do so on a PAYE basis. ‘
This is an incredible blanket decision and one that is reminiscent of similar statements made by certain organisations in the public sector when the changes to IR35 where introduced there back in 2017.
The issue with statements of this nature is that it will discourage talent and resource that operate via limited companies from providing services to this Bank, reducing the skills pool from which they can recruit.
It will also increase staffing and operational costs given the 13.8% NIC that will become payable on all human resource cost, when if certain aspects were assessed in isolation, would certainly not be the case.
This is certainly a game of cat and mouse, only time will tell if other private sector institutions follow suit or if they will take a more pragmatic approach.
The assessment of contracts on an individual basis certainly seems to be the norm in the public sector now some two years post implementation of the new IR35 rules.
If you are a contractor operating via a limited company and wish to discuss your options now and post April 2020, maybe you want to understand how you can close your company down in an efficient way whilst still having the option to enter the contracts market at a later date, contact us for a free no obligation consultation.