Sainsburys Contractor IR35 Policy – All Must go PAYE – No PSCs

Sainsburys Contractor IR35 Policy
Sainsburys Contractor IR35 Policy

Sainsburys Contractor IR35 Policy

It has been announced that the Sainsburys Contractor IR35 Policy is that they expect to use very few contractors in future who operate outside IR35 via personal services companies. They are going to test contractors using the CEST tool. However, because of their current working practices, which they won’t change, they expect the vast majority of contractors to test inside IR35.

Questions on Sainsburys Contractor IR35 Policy

  1. Which Options are Sainsburys giving their contractors?
  2. What should companies have done about the IR35 reforms?
  3. What are companies actually doing about the IR35 reforms?
  4. Will other supermarket companies copy Sainsburys Contractor IR35 policy?
  5. Did the Government intend companies to blanket ban personal service company contractors?

Which Options are Sainsburys Giving their contractors

They are giving their contractors two options:-

  1. Go PAYE
  2. Leave

In other words, almost all their contractors will be treated as if they are inside IR35. That’s no matter if they are really outside IR35. If HMRC’s test shows them to be inside then they are inside IR35s.

There is a domino effect now taking shape.

What should companies have done about the IR35 reforms

This was not supposed to happen.

Companies were supposed to make determinations on contractors’ IR35 statuses. They could use HMRC’s online IR35 test Check Employment Status for Tax.

If they passed the test they would be able to continue as normal. They could operate via personal service companies. They could get the normal tax benefits of being in business on one’s own account.

Those who failed the test would have to pay PAYE, most often through an umbrella company.

Indeed, the Government and HMRC said that companies could not blanket test their contractors. They had to be tested individually.

Sainsbury’s are actually testing the contractors individually. However, they know that their working practices will put almost all of their contractors inside IR35. It won’t be much fun for contractors sitting the test when they know what the result is almost certain to be.

What are companies actually doing about the IR35 reforms

However, it looks as if some of our biggest companies are blanket banning PSC contractors by saying that all their positions are now inside IR35.

It didn’t matter that some of the contractors that they are doing this to are actually outside IR35.

Sainsburys are not in that bracket but the result will be pretty much the same.

Our biggest companies are tumbling like dominoes.

First HSBC blanket banned contractors in the banking sector. Then RBS, Lloyds, Barclays and several others did exactly the same.

Will other supermarket companies copy Sainsburys Contractor IR35 policy

There’s a good chance that others in the food sector will do something similar. After all Tesco Bank have already blanket banned contractors so their retail food arm is likely to do the same.

We also see Vodafone in the telco sector blanket banning contractors. Others in the telco sector will be watching developments.

We hear of another big firm in another sector planning to ban contractors. However, we are awaiting confirmation on that one.

UK industry s being turned upside down. It’s all to gain in IR35 tax the equivalent to less than a tenth of a penny on income tax.

Did the Government intend companies to blanket ban personal service company contractors

These companies IR35 policy was not supposed to happen this way.

Companies effectively blanket banning contractors was not the Government’s intention.

So, the Government should step in and stop this before lasting damage is done to all the UK’s major companies.

Companies were operating at what they saw as their optimum level in terms of the mix between contractors and permanent staff.

Now they stand to lose a lot of experienced contractors who know heir business and their systems very well. This will cause havoc in the economy and it will destroy the flexible contractor market.

The Government must step in and stop this.

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