Reply to: HSBC contractors to be inside IR35

[jds 1981]

Morgan Stanley IR35 Decision - Bank Will Take No More Contractors

One more?

[ascender]

Had a chat with a hiring manager at HSBC. He said that contractors who had been there 1 year+ and pretty much doing the same job as a permie were being made permanent (he had 2 in his area). Mainly so the business didn't have to pay the extra employment taxes.

There was still scope to hire specialised consultants on a contract basis, for a defined project.

That's how it should be today though isn't it?

I'm at a Bank and at the moment the vast majority of contractors are brought in to do a specific role for x amount of time. They'll all be inside ir35.

What should be happening is you are engaged via your agency to deliver a specific scope of work with outcomes over the duration of that project. Once done, that's the engagement over and you move on to another company or maybe a different part of the organisation has something different needing done so that's a new engagement on new terms etc.

I'm sure this Bank will take every opportunity to use the rule change to cut rates (or at the very least keep them the same for everyone who is now inside IR35) while getting rid of existing contractors as part of a deck-clearing exercise. I think between now and April the market is going to be flooded with contractors because of this.

[Spoiler]

Had a chat with a hiring manager at HSBC. He said that contractors who had been there 1 year+ and pretty much doing the same job as a permie were being made permanent (he had 2 in his area). Mainly so the business didn't have to pay the extra employment taxes.

There was still scope to hire specialised consultants on a contract basis, for a defined project.

[BrilloPad]

Ingesting - I had few letters and phone calls to follow-up about KYC - it was just 5 mins online form to be filled. Had I not filled KYC they would have closed mine business account too. But they were quite good in follow up and clarifying any questions I might have in filling form ( just personal and company details).

Quite a few did not get a KYC form. My friend included. Just account closed.

[Mohit007]

Met a friend of mine in Metro bank a while ago. HSBC just closed his business account. No explanation. He was moving to Metro : though plenty of other business accounts around.

Moving accounts is always a pain.

Interesting- I had few letters and phone calls to follow-up about KYC - it was just 5 mins online form to be filled. Had I not filled KYC they would have closed mine business account too. But they were quite good in follow up and clarifying any questions I might have in filling form ( just personal and company details).

[BrilloPad]

Anyone know how easy it is to swap business accounts from one bank to another?

Met a friend of mine in Metro bank a while ago. HSBC just closed his business account. No explanation. He was moving to Metro : though plenty of other business accounts around.

Moving accounts is always a pain.

[deeter]

The offshoring approach should be interesting. A friend who works there has said they already offshore sections of the accounting departments to India and it hasn't gone very well....

[Guesstimator]

HSBC think they can get other contractors in to do the job. Or get permies in. Or they will offshore it.

Anyone know how easy it is to swap business accounts from one bank to another?

[BrilloPad]

So HSBC want to a 20% reduction in rate to cover their increased costs - what about the contractors increased costs as they will have to pay more tax and lose lots of expenses, especially if they work away from home.

HSBC think they can get other contractors in to do the job. Or get permies in. Or they will offshore it.

[BoredBloke]

A friend of mine has been told that he can a) go perm from next year onwards or b) accept a 20% reduction in current day rate and stay on as a contractor but inside IR35. His whole team has been told this by official email. The 20% reduction is presumably to keep HSBC's costs down as they will need to pay employers' NIC.

So either go perm, or stay contracting, with a big cut in the rate, and more tax. There are various posts suggesting that people will be offered the same day rate, but that in itself will be more costly for HSBC due to NIC. I wonder if the offer of a contract extension but at a lower rate + inside IR35 will materialise elsewhere.

So HSBC want to a 20% reduction in rate to cover their increased costs - what about the contractors increased costs as they will have to pay more tax and lose lots of expenses, especially if they work away from home.

[Quilp]

20% reduction in current contract rates offered at HSBC

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.

A friend of mine has been told that he can a) go perm from next year onwards or b) accept a 20% reduction in current day rate and stay on as a contractor but inside IR35. His whole team has been told this by official email. The 20% reduction is presumably to keep HSBC's costs down as they will need to pay employers' NIC.

So either go perm, or stay contracting, with a big cut in the rate, and more tax. There are various posts suggesting that people will be offered the same day rate, but that in itself will be more costly for HSBC due to NIC. I wonder if the offer of a contract extension but at a lower rate + inside IR35 will materialise elsewhere.

[northernladuk]

I would guess that this is poor terminology used here. Not an FTC in terms of being a pseudoemployee but just having a "fixed term" of (say) 6 months rather than 1 month rolling contract.

May be wrong though.

I think you are right, just yanking thr OPs chain but he needs to drop the rolling contract term as well.

[RyanDS]

An FTC? They are employment contracts so deffo inside.

Some people just use the wrong terminology.

My current role is definitely outside IR35, I am doing an audit and project lead on an implementation. The FD where I am working always refers to me being on a 6 month FTC, whereas technically it is an estimated 6 month project plan I am engaged to complete.

It's not worth the hassle of ever trying to ask him to not refer to me as on FTC.

Edit: Or what deludedkitten said...

[DeludedKitten]

An FTC? They are employment contracts so deffo inside.

I would guess that this is poor terminology used here. Not an FTC in terms of being a pseudoemployee but just having a "fixed term" of (say) 6 months rather than 1 month rolling contract.

May be wrong though.

[northernladuk]

Why do you think via third party is Inside IR35?

As per agency they are outside IR35 , and I will be working as consultant , but not contractor. I will get their contract reviewed by QDOS. Also, this is going to be fixed term contract instead of rolling contract.

An FTC? They are employment contracts so deffo inside.