Reply to: IR35 reforms prompt Barclays to re-engage contractors on PAYE terms

[wattaj]

...It's also exactly what many predicted would happen...

* waves *

[mudskipper]

I think its important to point out that they're not always going for an inside IR35 determination - some are applying a policy of "no contracts" and therefore no determination is required. Its a distinction with specific (positive) implications.

I agree with the rest of your post on how things will pan out, though i do think we'll start to see a trickle of "outside IR35" contracts appearing from banks 6-12 months after the new rules come in.

I agree with this.

They are going for the hassle free route - they are not providing a determination at all (and therefore do not need to implement the appeals process) - they are "simply" changing policy so that they no longer hire limited company contractors. It's exactly what I'd do if I was in charge of compliance at a large company. It's also exactly what many predicted would happen - and belies the claim that the genuinely self employed will not be affected by these reforms. It also discriminates against the smallest companies who can no longer bid for work at the bank. It's a mess.

[Paralytic]

The banks are risk averse and this move is no surprise.

They do not want employees on their books but they do not want a big unexpected bill. Therefore they will always go for an "inside IR35" determination and leave the agency/contractor to sort out an umbrella.

I think its important to point out that they're not always going for an inside IR35 determination - some are applying a policy of "no contracts" and therefore no determination is required. Its a distinction with specific (positive) implications.

I agree with the rest of your post on how things will pan out, though i do think we'll start to see a trickle of "outside IR35" contracts appearing from banks 6-12 months after the new rules come in.

[webberg]

The banks are risk averse and this move is no surprise.

They do not want employees on their books but they do not want a big unexpected bill. Therefore they will always go for an "inside IR35" determination and leave the agency/contractor to sort out an umbrella.

The agency is encouraging this as they have an umbrella and this allows them to continue to control the "flexible" workforce.

Umbrella rates will increase as they become the dominant force and the cycle repeats.

An umbrella is an umbrella - they are (or should be) all the same, save a few frilly edges.

There is no reason to use the agency umbrella and you should be looking around for the best suited to you option, both immediately and in the future.

[Paralytic]

To bring people in on PAYE means that they are not making any decision regarding IR35 because they are employing the person and removing the PSC from the equation.

Barclays have not said they will "bring people in on PAYE". They're pushing people to PAYE on umbrellas/managed service companies. Of course, specific projects/areas within the bank may open up positions and bring individuals in on perm, but that's not part of this internal announcement.

If this becomes the norm, it's going to be a nightmare simply having HMRC charging the correct amount of tax based on numerous contracts per year at different rates and possibly overlapping or with periods out of work. A doddle to do with a limited company. Not so easy to do with our cumbersome tax code.

Not sure what you mean by this. Contractors who no longer contract for Barclays via their PSC but agree to go PAYE via another means (umbrella, managed service) will have their taxes taken at source. And if you happen to have two such engagements running at the same time, then you'll have two employments, potentially pay "too much" tax at source but then settle up as part of your self assessment.

[BoredBloke]

I can see why Barclays have done this. They are avoiding making the inside/outside determination full stop. If they did a blanket everybody inside then surely at some point contractors would test the determination in court arguing that the bank wrongly classified them and the wrong tax was paid as a result. To bring people in on PAYE means that they are not making any decision regarding IR35 because they are employing the person and removing the PSC from the equation

If this becomes the norm, it's going to be a nightmare simply having HMRC charging the correct amount of tax based on numerous contracts per year at different rates and possibly overlapping or with periods out of work. A doddle to do with a limited company. Not so easy to do with our cumbersome tax code.

[JohntheBike]

They do this with the JLR factory workers down the road. Permiedom will be seen as the premium option v's the marginal increase in take home pay a worker will get.

JTB - we know.

JTB - we know

yes, I said it was the wrong option to substantially increase the workforce in JLR when there was an upturn because when the inevitable downturn occurred, as now, those workforce additions would be made redundant.. It would have been better to take advantage of the increased demand by making the company more efficient.

[BlueSharp]

I wonder if they will treat their new people as badly as their contractors? Yearly rate cuts, long furlough and mass culls.

Will raise a whole set of different questions of whether they can do this and open themselves to legal action.

That said its only the way we are paid so my guess is they won't treat us any different.

Inside and treated just as badly.

They do this with the JLR factory workers down the road. Permiedom will be seen as the premium option v's the marginal increase in take home pay a worker will get.

JTB - we know.

[northernladuk]

I wonder if they will treat their new people as badly as their contractors? Yearly rate cuts, long furlough and mass culls.

Will raise a whole set of different questions of whether they can do this and open themselves to legal action.

That said its only the way we are paid so my guess is they won't treat us any different.

Inside and treated just as badly.

[oliverson]

Barclays have been treating contractors appallingly for years, I don't know why anyone would work there.

I have a nasty feeling though that all the banks have got together in the hope of leaving nowhere for anyone to run.

Can't help wondering how many people will now not be able to pay their mortgages/private school fees etc. Good going Conservatives, going to pin this on Brexit?

More likely firms like Resource Solutions who have internal units in these places. Most of my London contracts have been through Resource Solutions, indeed two of them at Barclays. They'll be recommending this course of action to their clients. Can't see me contracting in London banking ever again unless IR35 gets abolished. The Revenue have killed the market, if not the countries flexible workforce and at a time when it's most needed. Congratulations.

[simes]

Nope. HMRC will see it as ringing endorsement of their opinion that all contractors are tax dodging scum and are finally being brought to heel. HMRC does not support small business enterprise no matter what the government of the day says.

What will happen is that all contractors who worked at those banks will have retrospective investigations. Hope your insurances are all up to date!

Yuuup!

Mine was just wish fulfilment. The retrospective bit I am too in fear of.

[ladymuck]

Or even, deep breath, the banks are putting these communiques out to demonstrate to the HMRC that if the UK's contractors all become PAYE, the tax income will actually drop. And irreversibly kill the flexible market.

(While at the same time protecting their obligations and interests.)

(I really don't think the banks are thinking like that, but the net result will be the same. Just depends on if the HMRC are listening / reading / thinking / planning ahead)

Nope. HMRC will see it as ringing endorsement of their opinion that all contractors are tax dodging scum and are finally being brought to heel. HMRC does not support small business enterprise no matter what the government of the day says.

What will happen is that all contractors who worked at those banks will have retrospective investigations. Hope your insurances are all up to date!

[simes]

I have a nasty feeling though that all the banks have got together in the hope of leaving nowhere for anyone to run.

Or even, deep breath, the banks are putting these communiques out to demonstrate to the HMRC that if the UK's contractors all become PAYE, the tax income will actually drop. And irreversibly kill the flexible market.

(While at the same time protecting their obligations and interests.)

(I really don't think the banks are thinking like that, but the net result will be the same. Just depends on if the HMRC are listening / reading / thinking / planning ahead)

[northernladuk]

KUATB from yesterday....

https://www.contractoruk.com/forums/...ry-2020-a.html

[TwoWolves]

Barclays have been treating contractors appallingly for years, I don't know why anyone would work there.

I have a nasty feeling though that all the banks have got together in the hope of leaving nowhere for anyone to run.

Can't help wondering how many people will now not be able to pay their mortgages/private school fees etc. Good going Conservatives, going to pin this on Brexit?