Sainsbury’s IR35 Delight for Contractors
We have news of Sainsbury’s IR35 policy for contractors. It’s the best piece of new for contractors in a very long time. Sainsbury’s are NOT going to blanket ban contractors who operate via personal service companies. They will not be listed among the ‘surrender monkey’ companies who have issued blanket bans on personal service company contractors.
Contractor Questions on Sainsbury’s IR35 Policy
- How are Sainsbury’s going to implement the Government’s IR35 reforms?
- What options are Sainsbury’s offering contractors?
- How did the Sainsbury’s ‘Blanket Ban’ Mix Up Happen?
- How should contractors take Sainsbury’s IR35 news?
- Which way are the IR35 reforms supposed to work?
- How should contractors prepare before sitting HMRC’s IR35 test?
- How can contractors find out their IR35 status?
- Do client companies want you to pass or fail the IR35 rest?
- Is it time to celebrate Sainsbury’s IR35 policy decision?
- Is Sainsbury’s IR35 Policy Effectively a blanket ban on using PSCs?
- Why do Sainsbury’s claim our IR35 article is untrue?
- What did Sainsbury’s contractors say about their IR35 policy?
- What is the real story on Sainsbury’s IR35 policy?
How are Sainsbury’s going to implement the Government’s IR35 reforms
The company tell us that they are going to test all their contractors using HMRC’s Check Employment Status for Tax test (CEST).
Those contractors that pass the IR35 test will be able to continue using their personal service companies. There will be no change for them at all. It will be business as usual for them to April 2020 and beyond.
What options are Sainsbury’s offering contractors
Those who fail HMRC’s IR35 test will be able to choose their own options as long as it is PAYE. It would depend on their own personal circumstances.
If there is no job at the company for them they can choose whether to go PAYE with their agency or to choose an umbrella company.
I’m told that they can choose whatever umbrella company they like.
How did the Sainsbury’s ‘Blanket Ban’ Mix Up Happen
We published an article recently that said Sainsbury’s Contractor IR35 Policy – All Must Go PAYE
There appears to have been a bit of a mix-up here. We got this information from a contractor there who said that the contractors were told they would all have to go PAYE.
I got back to him and told him that Sainsbury’s told me categorically that this was not true. They said they would test the contractors. Those that passed HMRC’s test would be allowed to continue using her personal service companies.
The contractor said that they were told that they would sit the test but that everyone would fail it. I got back to Sainsbury’s again. They said that although it’s possible someone might have said that they could assure me that it was not true. Sainsbury’s IR35 policy is as stated to me.
How should contractors take Sainsbury’s IR35 news
So, that’s that all cleared up now and it is very good news for contractors. As I told Sainsbury’s we are much happier publishing good news for contractors than publishing bad news for them.
And it is very good news indeed.
One hopes that other companies in the food retail sector will follow Sainsbury’s example. In the banking sector all the major banks followed HSBC’s example in blanket banning the use of personal service companies.
Which way are the IR35 reforms supposed to work
This is how the IR35 changes are supposed to work.
Companies were told that they had to test contractors individually. They couldn’t blanket test their contractors. However, it appears that they can just say that all of their contracts will be inside IR35 in the future.
What’s the difference between this and blanket assessing contractors?
The IR35 reforms were not supposed to work this way.
So, it is excellent news to hear that Sainsbury’s are going to allow contractors to carry on contracting as before – provided they test as being outside IR35.
How should contractors prepare before sitting HMRC’s IR35 test
Contractors in all companies, including Sainsbury’s, should use this time before they are tested to change their contracts and working practices. It’s easy enough done.
Here’s a couple of articles which may help.
How Companies Can Help Contractors Stay Outside IR35
See also 18 Ways Contractors can Stay Outside IR35 – Courtesy of he Special Commissioners
Provide companies cooperate there’s no reason for many, if any, contractors to be inside IR35.
How can contractors find out their IR35 status
The best thing to do is to test yourself anonymously using HMRC’s Check Employment Status for Tax (CEST). If you fail it you should then work out what changes you need to make to your contract and working practices.
Even if you pass the test it is worth doing this too. Remember that the company are likely to be more cautions than you when you are putting in the results with them sitting on your shoulder.
Do client companies want you to pass or fail the IR35 rest
I spoke to a person who is responsible for implementing the IR35 reforms at another company. They tested their contractors too He said that they were disappointed at the number of contractors who failed he test.
So, they will be on your side They will want you to pass. However, they will not want to take any chances.
HMRC have guaranteed that if you pass the test HMRC will not pursue your client company for back tax, penalties and interest. There is one proviso though. The data entered must be correct. So, companies will be ultra cautious here.
Is it time to celebrate Sainsbury’s IR35 policy decision
So, to end, this is fantastic news for Sainsbury’s contractors – and for all contractors. They were starting to fear that with the major banks and Vodafone opting for blanket bans that contracting as we know it would disappear.
However, Sainsbury’s decision gives the lie to that. Contracting will survive.
I think I will buy a large bottle of Sainsbury’s own brand champagne to celebrate when I go there shopping later this week – and open it on Christmas day to celebrate.
If any of our readers know of other companies that are going to test contractors individually rather than blanket ban PSC contractors then let us know. We will be happy to spread the good news.
Stop Press
We’ve just had this from a contractor at Sainsbury’s:-
Is Sainsbury’s IR35 Policy Effectively a blanket ban on using PSCs
“Well, not good news, as Sainsburys have already deemed all roles “inside” IR35 after April after using the flawed CEST tool. So effectively a blanket ban regardless.
“This has been communicated to all of their contractors already with clear instruction that they will not be changing their minds on any decisions and there is no opportunity to appeal. This is also true for contractors hired via third party consultancy companies.”
This contractor is saying exactly the same as another contractor who contacted me initially before I wrote the original story.
Why do Sainsbury’s claim our IR35 article is untrue
What is going on here? The Press Office at Sainsbury’s sent me an email saying the following:-
“There is a news story on the site alleging Sainsbury’s is automatically registering all contractors as IR35 – this is completely untrue. A quick call to the press office would have confirmed this.
Please can you correct the article immediately?”
I called up and it was confirmed by the Press Office who had spoken to those in charge of the IR35 rollout there.
He told me that all contractors would be assessed using the CEST tool. Those passing the test would be able to use their PSCs.
What did Sainsbury’s contractors say about their IR35 policy
I asked the original contractor who told me about it if this was true
He told me :-
The official line is that they will do individual tests but unofficially everyone will be in ir35. That’s what we’ve been told.”
This was announced on batches of conference calls to contractors by the overseeing agency. It’s merely a formality that they will give the determinations individually, probably to avoid legal implications of “blanket” ruling “.
So, I contacted the Press Office at Sainsbury’s who said that this was not true. There would be some who were inside and some who were outside IR35.
However, the original guy who contacted me has now said:-
” This is a technicality, we have been told that Sainsbury’s expect all contractors to fail the tests, so this story is not true in practice: “
What is going on?
Stop Press 2
What is the real story on Sainsbury’s IR35 policy
At last I have e real story. Read it here:-
Contractors Sainsburys IR35 Hopes Dashed – Almost All Will Fail HMRC Test
We have a new poll asking contractors what they would do if their client company put a blanket ban on contractors who operate through personal service companies. It’s on the top right of this page. Vote now!
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Well, not good news, as Sainsburys have already deemed all roles “inside” IR35 after April after using the flawed CEST tool. So effectively a blanket ban regardless.
This has been communicated this all of their contractors already with clear instruction that “they will not be changing their minds on any decisions or there is no opportunity to appeal. This is also true for contractors hired via third party consultancy companies.
Whats so bad about paying the same tax and NI as normal people? There should be some expenses allowed when working beyond commutable distance from home though.