HSBC Contractors IR35 Dilemma
HSBC contractors IR35 dilemma is a direct consequence of the Government’s decision to implement their IR35 changes in the private sector. They implemented them in the public sector in 2017. Prime Minister Theresa said that it was “an anomaly that a self employed person on 100,000 a year paid less tax than a permanent employee earning 100,000 a year. This is how she plans to fix his ‘anomaly’.
So, HSBC have taken the decision to no longer use limited company contractors. They are taking on no more contractors after this autumn. They have given contractors 3 options:-
- Leave
- Take a permanent job
- Work through an umbrella company or agency
What is Happening at HSBC
We asked a contractor at HSBC what is happening there. What would their contractors do? What is HSBC Contractors IR35 dilemma? Here is the reply.
They advised us that contractors particularly in IT are not to be renewed past the end of October. New contract positions are being declined. Any that were approved I believe are only for a maximum of 3 months.
A lot of contractors are remaining positive but many are looking and hoping this will just not happen.
There are some permanent positions on the table. However, HSBC also have an IT transformation project to reduce headcount so this contradicts itself.
No Contracts Being Renewed at HSBC
I do not know of anyone who has had their contract renewed. Additionally, it was mooted that a consultancy will step up, e.g Capco who are already in the bank, and create an offering for contractors to work through them. Or they may just recruit a load of people direct to put in.
Cost wise this is probably going to cost 3 times as much! But there is a rumour that this will also not be considered.
Looking for Work – HSBC Contractors IR35 Dilemma
Everyone I have spoken too is still hopeful of finding a job outside of banking to remain on the same rate.
Some are considering HSBC’s permanent job offer. However, only if there is a compromise such as a package equal too day rate x 220 days minus 20%. However, banks do not pay great salaries.
Everyone else is more than happy to stay in their current position and work via an umbrella type agency.
IT Contractor Comment on HSBC Contractors IR35 Dilemma
It is surprising that many banks and finance companies in the private sector are even more timid than many organisations in the public sector. In the public sector the NHS, MoD and HMRC were quick to implement blanket bans on the hiring of limited company contractors. However, many other organisations did hire limited company contractors.
So far three banks and a finance company have been intimidated into refusing to take on contractors. They are HSBC, Lloyds, Morgan Stanley and M&S Investments.
Many Companies Considering Blanket Ban on Contractors
RBS say they will continue to take contractors. A report by Brookson Legal shows that 59% of all companies are considering blanket bans on contractors.
The crucial things is what contractors will do. This is the HSBC contractors IR35 dilemma.
Will they take a permanent job with HSBC? Will they leave the company at the end of their contracts? Or will hey join an umbrella company?
IT Contractor Comment on HSBC Contractors IR35 Dilemma
Let me make a prediction after seeing what happened in the public sector. Very few of the contractors will take permanent jobs. A few contractors will be able to find contracts elsewhere. However, that won’t be easy as the banking sector pay a premium to most other sectors. And other banks are laying contractors off.
Contractors Will Operate Via Umbrella Companies
What happened in the public sector, and I fully expect will happen here, is that most HSBC contractors will bite the bullet and operate via an umbrella company. This will mean them losing 20% to 25% of their income. That will be painful. But they will still have work.
This is what the vast majority of HSBC contractors will do and so will the contractors at the other banks. I would expect that this will hold true for contractors at companies in other sectors too.
It will not be the end of contracting. However, it will be a lot less profitable in the future.
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