Big IR35 Question – Will Companies Reverse Their PSC Contractor bans

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Big IR35 Question for Contractors
Big IR35 Question for Contractors

Big IR35 Question for Contractors

Now that the off payroll tax changes ave been delayed for a year, here is the big IR35 question for contractors. Will companies who put a blanket ban on PSC contractors now reverse this policy for a year?

Questions on What Companies Will Do Now as Regards PSC Contractors

  1. What options did blanket banning companies give PSC contractors?
  2. So, what IR35 options did contractors take?
  3. What will all those big companies do now?
  4. Have the big companies already gone too far along the No PSC route – Big IR35 Question?
  5. Will Companies now reverse their anti PSC policies for a year?
  6. Have we had a clue as to what companies will do now – Big IR35 question?
  7. What is the future for contractors in the middle of all this?

What options did blanket banning companies give PSC contractors

Most of the UK’s top companies have already decided to ban contractors from operating via personal services companies. They have tried to force them to go PAYE.

Many of them have given contractors three options:-

  1. Go PAYE with an umbrella company
  2. Go PAYE with their agency
  3. Leave

What IR35 options did contractors take

Already some contractors have chosen option 3 and have left the companies. Others have informed their client companies that they will be leaving when their contracts run out, usually in early April.

Other contractors have agreed to move from using a personal services company to going PAYE via an umbrella company or other intermediary.

What will all those big companies do now

So, the big IR35 question is what those client companies will do now that the IR35 reforms are suspended.

The Government has already told us that the reason that companies are blanket banning the use of PSC contractors is because they all, at the same time, did reviews and decided that the use of contractors was not the best business model.

We think that analysis is incorrect. We believe that is is only because of threats from HMRC and the Government to fine them hard that they have changed their business models to exclude PSC contractors.

Have the big companies already gone too far along the No PSC route – Big IR35 Question

Many of the companies, however, have gone a long way along the road of changing from using personal services company contractors to using ‘permitractors’ i.e. contractors who operate via umbrella companies or their agencies, paying PAYE.

So, the $64n dollar questions now is this. If they have a year to play with, will those companies now go back to using PSC contractors for the next year. Or will they stay on the path they have started and continue to blanket ban PSC contractors?

If companies suspend their move towards PSC free contractors this will show that the Government was wrong in saying that the companies had found better business models that excluded PSC contractors.

Will Companies now reverse their anti PSC policies for a year

I must confess that I don’t know what is going to happen here. I suspect that some will reverse their policies and some will keep on the path they have started as they will have to do it anyway next year and they don’t want a double disruption.

But which will be in the majority?

However, they will find it a lot more difficult to hire contract staff if they are prepared to pay effectively a lot less than their competitors who would use PSC contractors.

Have we had a clue as to what companies will do now – Big IR35 question

There may be a bit of a clue in those companies actions after HMRC said that they could continue to pay contractors for work done up to April 6th even if they are invoiced after that.

Most companies blanket banning PSC contractors extended most of their contractors up to the April 6th date.

What they do will be very interesting. This will show whether they really have a found a new better business model like the Government say, without PSC contractors – or they were just afraid of being fined by HMRC.

What is the future for contractors in the middle of all this

This is the big IR35 question at the moment.

We will watch the way this plays out.

Perhaps contractors who are in the middle of these mooted blanket bans on PSC contractors can keep us informed as to what their client companies will decide.

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For all critical IR35 news and advice for contractors click on IR35 News.

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