GlaxoSmithKline IR35 Shock
The GlaxoSmithKline IR35 policy has now been revealed to their contractors. All contractors at GSK must now go PAYE or leave the company. This is just the latest company to issue a blanket ban on contractors using personal service companies.
Contractor Questions on GlaxoSmithKline IR35 Policy
- What previous shock did HMRC have for GSK contractors?
- Were GlaxoSmithKline intimidated into issuing a blanket ban on PSC contractors?
- Were GSK spooked by HMRC’s letter to their contractors?
- What is the reason for the GlaxoSmithKline IR35 decision?
- What about GSK’s contractors who are outside IR35?
- What are the Government doing to rein in HMRC?
What previous shock did HMRC have for GSK contractors
It was just a few months back that GlaxoSmithKline’s contractors got a shock in the post. It was a letter telling 1,500 of them that HMRC judged them to be inside IR35. They were told to stump up the previous year’s PAYE tax and National Insurance immediately or face the consequences.
A number of the contractors sought legal advice and were fighting the case.
Said one contractor “No one has ever heard back from HRMC since we responded to their initial letter so the ball is back in their court. It’s hard to know if we’ll ever hear from them again or if it was just a threat to make sure GSK would make everyone move to PAYE from April next year”.
Were GlaxoSmithKline intimidated into issuing a blanket ban on PSC contractors
Now this action seems to have ‘softened up’ GSK enough so that they have now decided to hire no more contractors who use personal service companies.
Not only that, all their current contractors will have to go PAYE as well under the new GlaxoSmithKline IR35 policy.
The deadline date for personal service company contractors is March 10th.
Contractors have been renewed up till then.
Then it’s the abyss of a permie job for much less money or being out of work. At least they have until March 10th. Contractors have until January 31st to inform GSK as to what they want to do
Some other companies are giving their contractors very little time at all to make up their minds as to whether they accept the deal or not.
If they decide to leave they can remain on their current contracts till they run out.
Were GSK spooked by HMRC’s letter to their contractors
It looks as if GlaxoSmithKline have been spooked by the HMRC ultimatum to its contractors.
They have said directly that it is the new IR35 rules that is causing them to do this.
It is not clear yet who the contractor would pay the PAYE through but it will not be GSK. It looks as though it would be either through their agencies or through an umbrella company. Those in umbrella companies are told the changes won’t affect them.
What is the reason for the GlaxoSmithKline IR35 decision
The only thing that was made clear is that GSK won’t be out of pocket in any way as a result of the new GlaxoSmithKline IR35 policy. So contractors are the ones who will be taking the hit for all additional expenses for employer NI etc.
The letter from the agency states “This decision was made following a thorough assessment of their work practices.”
Surely this is a blanket assessment which is not allowed under the new rules.
Companies can decide not to take any more personal service contractors on. However, they cannot make a blanket assessment of their contractors. That’s quite explicitly stated.
What about GSK’s contractors who are outside IR35
Many of the contractors that GSK will force to go PAYE, due to the GlaxoSmithKline IR35 policy, are actually outside IR35. They are not even being allowed to sit HMRC’s Check Employment Status for Tax (CEST) online IR35 test.
This is highly unfair.
The Government are doing nothing about this very unfair system of blanket banning contractors including those who are legitimate contractors.
The purpose of this new legislation is to make sure that people pay their fair amount of tax.
Forcing contractors who are outside IR35 to pay PAYE is NOT making them pay their fair rate of tax.
All the UK’s big banks are blanket banning personal service company contractors as are companies like Vodafone.
This forces contractors who are outside IR35 to pay an unfair tax rate.
What are the Government doing to rein in HMRC
Yet the Government do nothing to rein in HMRC.
The Government’s contractor IR35 policy appears to be that they want to abolish them all. They want to make them all pay more tax, genuine business or not
Treasury Minister Jesse Norman said recently when answering a question in Parliament on IR35 “There is only 10% compliance in this area”.
The Government announced in the Queen’s Speech that they are going to extend IR35 further. They said “We will increase fairness and and flexibility in the labour market by stopping the self-employed and workers experiencing significantly different outcomes from flexible forms of working.”
We will see the outcome of this very soon in the Budget after the election.
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