HSBC contractors to be inside IR35

[K12AN]

I've heard from a reliable friend of mine who is contracting at HSBC, that they are informing their contractors that they will be inside IR35. There will be no changes to day rates and contractors will either continue on their projects at current rates, be offered perm roles (in some cases) or they can reject this and walk away.

I'm guessing that because we are now less than 12 months from the April 2020 date, those on 12 month contracts will need to know where their contracts sit.

Are there any other HSBC contractors in the forum who've been informed similarly?

Whilst this isn't unexpected, I'm surprised by the blanket determination by such a large organisation.
I was hoping that one of the big players would make the necessary updates to working practises and contracts etc. to allow them to determine their contractors out of scope - or at least look at roles individually and then decide.

Worrying if this is the precedent and other simply follow.

[ShandyDrinker]

Sadly I'm not surprised by this at all and expect the majority of other organisations to take the same approach.

There will obviously be pockets of resistance but from an HR perspective they probably don't want the hassle of having to assess on a contract by contract basis. There was me thinking blanket assessments weren't going to be allowed, even if it that's precisely what HMRC wants.

It will now be a war of attrition. I hope people have a large warchest in order to fight but sadly I think the majority will just bend over and take it

As has been pointed out elsewhere, those offering outside IR35 contracts really will get the pick of the candidates.

[BrilloPad]

I thought bigger organization would have the pockets to fight this. I am a bit disappointed. Though not surprised.

IPSE, QDOS and agencies could find their business model destroyed if they are not careful.

[JohntheBike]

I'm surprised that no one has mentioned the new payslip regulations which now take effect. Anyone who is paid on a variable basis, e.g. per hour worked, can now ask for a payslip. This seems to have slipped past the gaze of those who will be administering "inside" contracts. So, if the payer is required to produce a payslip showing tax deducted at source, employer's NI and employee's NI, then that individual will look very much like a full employee. If it looks like a duck, quacks like a duck and walks like a duck, then it is a duck.

I agree there will be peripheral wars of attrition and some clients will fall foul of ET judgements, but HMRC's approach is clearly designed to intimidate clients into making blanket inside determinations, with the accompanying increase in tax take. They have already justified the rules in the public sector by claiming an increase in tax take, conveniently ignoring that there hasn't yet been a full cycle involving corporation tax, which is likely to show a roughly corresponding decrease in tax take. I'm expecting HMRC to gloss over this quoting a reduction in the corporation tax rate as reason for the decrease. Even the odd high profile loss, i.e. Kelly, won't stop them. It's difficult to see how the contracting community can recover from this.

[TheInvoicer]

There has been no communication on this, I doubt they have even worked out the approach yet either.


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[northernladuk]

There has been no communication on this, I doubt they have even worked out the approach yet either.

And with so many unknowns even if they did I wouldn't bank on it being the same in 12 months either.

[Hobosapien]

And with so many unknowns even if they did I wouldn't bank on it being the same in 12 months either.

Precisely why big corp risk assessments will err on the side of caution and blanket deem inside IR35. It's those pesky unknown unknowns.

[northernladuk]

Precisely why big corp risk assessments will err on the side of caution and blanket deem inside IR35. It's those pesky unknown unknowns.

I'm not 100% sure on that. We expected PS clie ts to do this and many didn't. Also with the distinct possibility of a massive exodus of contractors its gonna cost them a lot just to err on the side of caution.

I'm not convinced you are right there and as I say if they are thinking that now I'd expect that will change as the impact becomes more apparent

[TheInvoicer]

I'm not 100% sure on that. We expected PS clie ts to do this and many didn't. Also with the distinct possibility of a massive exodus of contractors its gonna cost them a lot just to err on the side of caution.

I'm not convinced you are right there and as I say if they are thinking that now I'd expect that will change as the impact becomes more apparent

I’m sure the cost of making changes to ensure risk is minimised for determinjng outside will be a lot less than the cost to loose your flexible, skilled and in demand resources.


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[Hobosapien]

I'm not 100% sure on that. We expected PS clie ts to do this and many didn't. Also with the distinct possibility of a massive exodus of contractors its gonna cost them a lot just to err on the side of caution.

I'm not convinced you are right there and as I say if they are thinking that now I'd expect that will change as the impact becomes more apparent

Fair do's I'm not convinced either, it's a known unknown at this point.

Has HMRC gone after any PS clients that dared blanket deem outside IR35 or were they only blanket deeming inside IR35?

If HMRC start kicking PS clients for deeming wrong (i.e. outside when should be inside ), blanket or otherwise, then private sector will take note. That's if they have their finger on the pulse at all and it's not another unknown unknown until someone at HR gets a memo and then it becomes a known unknown while the rules are finalised for next April.

Maybe HSBC are ahead of the game and looking at current work practices of the affected roles think there is little room for being able to deem outside. Are they known for being so proactive?