Are UK Banks Operating IR35 Cartel
The questions must be asked of UK banks are operating an IR35 cartel. One after the other the UK banks are announcing blanket bans on the use of contractors using personal service companies. The most sensible thing for them to do would be to test their contractors using HMRC’s online Check Employment Status for Tax test (CEST) or use a similar one created by the big consultancy companies.
Those contractors who tested inside IR35 or were indeterminable would not be able to use their Personal Service Companies in future Those who tested outside IR35 would continue to be able to operate via their personal service companies. That way the big banks would be able to keep the best of their contractors.
Contractor Questions on UK Banks Operating IR35 Cartel
- What would be the smart IR35 path for UK banks?
- What happened when the IR35 changes hit the public sector?
- What are the major banks doing about the IR35 reforms?
- Are UK banks operating an IR35 Cartel?
- Is there new IR35 legislation coming our way?
- Is the UK Government Colluding with major banks against contractors?
- What would be the sensible path for banks on IR35?
- How would banks act if they had advance warning of new IR35 Legislation?
- What would happen if any banks stayed outside an IR35 cartel?
- Are the Government and UK banks operating a massive swindle on contractors?
What Would Be the Smart IR35 Path for UK Banks
HMRC are promising that they will stand by the results of their CEST test. They say that if a contractor passes the Check Employment Status for Tax test but are later found to be inside IR35 they won’t punish the testing company financially.
So, it is perfectly safe for companies to make their contractors sit the test and to allow those contractors passing it to use their personal service companies.
What Happened When the IR35 Changes Hit the Public Sector
This is what happened in the public sector. Even those organizations like the NHS, MoD and HMRC who initially issued blamket bans on PSC contractors, relaxed their positions later.
Even HMRC are now using some personal service company contractors. Many other public sector bodies are allowing contractors to continue to operate via their PSCs.
What Are the Major Banks Doing About the IR35 Reforms
It looks, so far, that most private sector companies are going to do the same.
So why are the banks not doing this? And why are they all operating blanket bans on PSC contractors? That’s very strange isn’t it?
One after the other the major UK banks are announcing a total blanket ban on using personal service company contractors.
Why, for God’s sake? It’s perfectly OK to use them if they pass HMRC;s test.
There’s something funny going on here. Are the UK’s major banks operating an IR35 cartel between them? It is a huge coincidence that they are all announcing this at petty much the same time.
Very few companies in other sectors are currently doing this So why the banks? And why all around the same time?
Are UK Banks Operating an IR35 Cartel
The UK banks have often been accused of acting like a cartel in the past. Any time there is some new charge on customers which one bank announces, it is swiftly followed by the other banks announcing the same thing.
Why are the banks punishing contractors financially when they don’t need to even by the Government and HMRC’s rules? They are acting as if they know something we don’t. We asked this question before.
Is There New IR35 Legislation Coming Our Way
Is there some fresh IR35 legislation coming out way?
This would seem to be the case with Treasury Minister Jesse Norman saying in the House of Commons, when answering a question on IR35, that there is only 10% compliance in this area. That’s despite figures showing that 54% of contractors pass HMRC’s IR35 test which allows them to use their personal service companies.
A few weeks later HMRC made the same claim about only 10% compliance. However, beyond the public sector IR35 changes to come in April 2020 the Government has made no new announcement on any more IR35 changes.
Is the UK Government Colluding with the Banks Against Contractors
Have they told the major banks something that the rest of he UK’s companies don’t know? Is this why it looks as if the banks are operating a cartel?
If one of the major banks decided that they would continue to hire contractors using personal service companies if they passed the HMRC IR35 test that would give them a massive advantage on their rival banks.
They would be able to scoop up most of the best contractors They would be able to attract all that business and systems knowledge acquired at the other banks on projects such as the LIBOR decommissioning project.
Now I have to say at this point that I have no information that the major banks have been told something market sensitive by the Government that has not been released to the Stock Market yet. Nor do I have any knowledge of any IR35 cartel being operated by the UK’s major banks.
However, here is what any sensible company would do in three different circumstances.
What Would the Sensible Path be for Banks on IR35
If the major banks have no advance knowledge of future legislation on IR35 they would do what organizations in the public sector did. They would IR35 test their contractors. Those inside IR35 would have to go PAYE or join an umbrella company.
Those outside IR35 could continue to use their personal service companies.
How Would Banks Act If They Had Advance Warning of New IR35 Legislation
If the major banks did have knowledge from the Government that they had plans to make 90% to 100% of contractors inside IR35 then tey would act exactly as they are acting..
Of course the question would have to be asked as to why the Government is giving market sensitive information to some companies and not others. Why would he Government be giving the banks market sensitive information before they announce it to the Stock Exchange and the public. This information could affect share prices.
What Would Happen If Any Banks Stayed Outside an IR35 Cartel
However, if some banks broke ranks and decided not to operate a blanket ban on contractors then those banks would have a massive advantage on the banks issuing blanket bans.
Contractors would leave the blanket ban banks en masse and take their skills and knowledge to banks who would allow them to use their personal service companies. This problem would only be avoided if all the banks acted in unison and issued a blanket ban on personal service company contractors.
They would be conspiring between them to do down contractors. Contractors would then have no option but to stay with their current bank clients (now employers). They would have to pay tax at the full rate even though probably over half of them are, in reality, outside IR35.
Are the Government and UK Banks Operating a Massive Swindle on Contractors
If the banks and Government are really operating an IR35 cartel, this would be a massive swindle on contractors There is a good chance that this would be against the law.
If the banks, with the complicity of the Government, are operating an IR35 cartel in order to make sure that their contractors have nowhere else to go to they would be cheating the free market. If they are conspiring to defraud contractors this would be a massive scandal.
I have to say again that I have no knowledge of either the Government supplying the banks only with market sensitive information nor of whether the banks are colluding against contractors to spoil the free market trade in freelancers.
All I am saying is that they are acting in exactly the way that they would do if both of these suppositions are true. And this would almost certainly be illegal.
Anyone know any legal experts in this area?
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