RBS IR35 Decision
We finally have the RBS IR35 decision. The Royal Bank of Scotland will no longer hire any more contractors. The contractors they already have will have to stop being contractors by February 20th. All RBS contractors will be paying PAYE after that date.
Contractor Questions on RBS IR35 Decision
- When will RBS contractors be told about the blanket ban on contractors?
- What Options will RBS give contractors?
- Can contractors continue to use their personal service companies?
- What is the reason for the RBS IR35 Decision?
- Which banks have put blanket bans on hiring contractors?
When Will RBS Contractors Be Told About the Blanket Ban on Contractors
One on one discussions will be taking place between contractors and managers shortly. The contractors will be told that the bank will not be using contractors any longer.
He, or she, will be given two options and a certain amount of time to make a decision. It looks as if HMRC and the Government are terrifying companies into having contractors who are outside IR35 operating as though they are inside.
What Options Will RBS Give Contractors
Contractors ate going to get only two options:-
- Join an Umbrella Company and pay PAYE that way
- Pay PAYE through one of the bank’s existing suppliers payroll providers
Those are the only two options. A permanent job is not an option – although they can apply like anyone else for any positions.
Can Contractors Continue to Use Their Personal Service Companies
There will be no more contractors using personal service companies. No contractors will be taken on that use them. Existing contractors will have to dump their limited companies by February 20th.
The deadline for contractors to decide their new engagement type is January 17th.
What is the Reason For the RBS IR35 Decision
RBS is just the latest bank to capitulate to the Government and HMRC. The new rules to be rolled out to the private sector in April 2020 were only supposed to sort out which contractors are inside IR35 and which outside.
It was not supposed to cause blanket bans on the use of contractors. However, the fact that the hiring company now had to determine a contractor’s IR35 status and would be financially punished if they got it wrong has caused nervous banks to put a complete ban on the use of contractors.
Which Banks Have Put Blanket Bans on Hiring Contractors?
This banks who have already announced a blanket ban on contractors using personal service companies are:-
- Barclays Bank
- Lloyds Bank
- Morgan Stanley
- Tesco Bank
It appears to be having a domino effect. There was talk a few months back that RBS would continue to hire both contractors inside IR35 and outside. It looks as if this is now not correct.
The end of contracting as we know it is coming ever closer. The RBS IR35 decision contributes towards that.
Do the banks know something that we don’t? Chancellor Sajod Javid has many contacts in this sector having been Managing Director of Deutsche Bank. It will be interesting to see what Deutsche Bank decide.
See Boris Johnson to Abolish Contracting Profession in Final IR35 Assault
Please share this article using the social media buttons at the top and bottom of the page.
Ad – Contractor Services
Many private sector contractors are likely to be told by their client company either that they must operate as an off-payroll employee or join an umbrella company. It’s time to plan for that now.
They need to look at umbrellas ASAP.
Do you need an umbrella company that is right for you and returns you most? Fill out the form below to receive a call today.
For all necessary business insurance, including IR35, click on Business Insurance for Contractors
Pretty much as expected really. Contracting, as we have known it, was good while it lasted. Umbrella companies must be rubbing their hands at the prospect of creaming off thousands without much effort or risk to their own business.
Hi, I think this article is quite misleading because it is badly worded:
You can’t say:
“The Royal Bank of Scotland will no longer hire any more contractors.”
“All RBS contractors will be paying PAYE after that date.”
The two statements are contradictory.
You mean that RBS will stop engaging contractors via PSCs (Limited Companies). RBS will still engage contractors, but only on a PAYE / direct basis.
Also, the way you are using the terminology of “blanket” ban is very confusing.
As far as I am aware, there is no issues if a firm no longer wishes to engage contractors via a PSC/Ltd company. This is exactly what Barclays have done. The term “blanket” is most often being used in terms of “blanket determination” in relation to IR35.
Status determination and whether a firm wishes to engage contractors on a PSC/Ltd company basis are two different matters.
It is “blanket” status determinations that have been deemed non-compliant with the legislation. This could only apply should a firm be willing to engage contractors via a PSC/Ltd Company.
If a firm is simply unwilling to engage contractors on a PSC/Ltd Company basis (ie Barclays and now RBS amongst others) then status determination is irrelevant.