RBS Limited Company Contractors
RBS limited company contractors can breathe a sigh of relief. The bank is not going to adopt a blanket ban on limited company contractors like some other banks have announced. They will continue to use contractors in tandem with the new IR35 rules. RBS are waiting to find out what is the in the draft legislation to be published shortly by the Government. Then they will make their announcement after deliberations at the bank.
RBS Limited Company Contractors Questions on IR35 Changes
Here are some questions contractors may ask about RBS limited company contractors policy on IR35:-
What Options are other banks giving contractors?
How will RBS implement the IR35 changes?
So, how did the IR35 changes operate in the public sector?
How will RBS work with Limited Company Contractors Over IR35?
Will RBS Limited Company contractors be given help to stay outside IR35?
What Options Are Other Banks Giving Contractors
Other banks are giving contractors three options:-
- Join the permanent staff
- operate via a 3rd party like an umbrella company or agency payroll
How Will RBS Implement the IR35 Changes
However, it looks sure that the RBS limited company contractors won’t be given that ultimatum. It looks as though RBS will get their contractors to sit the Check Employment Status for Tax IR35 (CEST) test.
If the RBS limited company contractors pass the test they will allow them to continue to operate via those limited companies. If they don’t pass the test then, on previous experience, contractors will either have to pay their IR35 tax or operate via a 3rd party, e.g. an umbrella company or agency.
So, how Did the IR35 Changes Operate in the Public Sector?
What happened, in practice, in the public sector was that the contractors who didn’t pass the CEST test joined umbrella companies. I expect it to be the same here.
So, just over half of the RBS contractors will continue to be able to use their limited companies. Just less than half will then have to switch to umbrella companies.
How Will RBS Work With Limited Company Contractors Over IR35
Of course, what would be really great would be if RBS could work with contractors to make their working practices to be more likely to take their contractors outside IR35. Now that would be something.
RBS sent out advice to many of their contractors on how to remain outside IR35. So, this may be a pointer to what the bank intends to do. They may be looking at helping as many contractors as possible to remain outside IR35 before getting them to sit the Check Employment Status for Tax online IR35 test.
HMRC say that they won’t chase companies for a contractor’s back tax if companies get their contractors to sit the CEST and they pass it.
Will RBS Limited Company Contractors Be Given Help to Stay Outside IR35?
So, the formula may be that the bank give as much IR35 advice to contractors as they can, change their joint working practices and then get the contractors to sit the test. That way a lot more than 54% of heir contractors would be able to stay outside IR35. They would continue to use their personal service companies.
We’ll know more after the draft IR35 legislation is publicised shortly and RBS react to that. However, it is looking pretty hopeful there.
If you know anyone else who would find this article useful, please share it with them using the social media buttons at the top and bottom of the page.
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, try Business Insurance for Contractors