Tesco Bank Contractor IR35 Decision – All Freelancers Will Be Inside IR35

Tesco Bank Contractor IR35 Decision
Tesco Bank Contractor IR35 Decision

Tesco Bank Contractor IR35 Decision

Another domino has fallen in the banking industry with news that the Tesco Bank IR35 Decision is that they will no longer allow their contractors to operate outside IR35.

Contractors will be off payroll workers from March 2020. No contractors will be able to operate via their personal service companies beyond March. Tesco Bank say they will agree to honour contracts beyond April 2020 but with the proviso that contractors have to agree that those contracts are inside IR35.

This has set up mass panic at the bank as contractors worry that if they agree to that, then HMRC will come after them for previous contracts at the bank and elsewhere.

Questions on Tesco Bank Contractor IR35 Decision

  • What options are Tesco Bank giving their contractors?
  • Will Tesco Bank Contractors now have to pay back tax?
  • Is the Tesco Bank Contractor IR35 Decision long term or short term?
  • What are the other banks doing with their contractors?
  • What will the Tesco Bank contractor IR35 decision mean to contractors overall?

What Options Are Tesco Bank Giving Their Contractors

It seems that Tesco Bank are giving their contractors just two options – Take it or leave it.

There will be no rate increases to compensate their contractors for the drop in income they will have. It seems it is the same for everyone.

Other banks have offered the option of taking permanent jobs. However Tesco Bank hasn’t offered this.

Will Tesco Bank Contractors Now Have to Pay Back Tax

I’m told by a contractor at Tesco Bank that ” it appears there may be a mass exodus in the coming months as folk who have claimed outside IR35 up until now are scared they will be chased for backdated tax when Tesco declare all their contractors are deemed inside IR35″.

Of course HMRC have said on this that their focus will be on making sure that these IR35 changes work rather than chasing contractors who are now deemed inside IR35 for back tax.

However, you will note that they have not categorically said that they won’t chase them.

Is the Tesco Bank Contractor IR35 Decision Long Term or Short Term

Tesco Bank management say that this is a holding position till they manage to work out a long term position on it. This has been taken with more than a little pinch of salt by their contractors. Tesco Bank have had plenty of time to work out a position on this. It was even delayed for a year to allow for consultation and to allow companies to prepare for this.

Perhaps they are waiting to see what other banks do. Perhaps they are waiting to see what contractors do both at their bank and at other banks in the run up to April 2020 and beyond. Perhaps this is just an excuse and they fully intend to blanket ban contractors for the foreseeable future.

Said one contractor ” I do hope it is a holding position as there are folk definitely leaving if nothing is changed – and it will be a good few of them”.

Another contractor said, tongue in cheek, “we might be allowed in the car park now”.

The fact that Tesco Bank are offering only two options, take it or leave it, would maybe point to it being a holding position. Other banks have given contractors a third option – take a permanent job. That would be harder to unwind if their long term position was to continue to take contractors.

What Are the Other Banks Doing About Their Contractors

Other banks who have decided to blanket ban contractors operating outside IR35 include the following:-

  1. Barclays Bank
  2. Lloyds Bank
  3. HSBC
  4. Morgan Stanley

All of those are offering permanent positions to contractors and none of them say that this stance is a holding position like Tesco Bank are doing.

So, maybe Tesco Bank contractors will want to leave rather than have HMRC come after them for back tax. However, there will be fewer and fewer places for them to go. That’s at least in the banking sector.

What Will the Tesco Bank Contractor IR35 Decision Mean to Contractors Overall

With more and more contractors chasing fewer and fewer contract positions, rates are sure to fall both in the banking sector and in contracting generally. That’s at a time when contractors will be able to keep less and less of their income.

What some contractors have done is set up an IR35 group for contractors so that they can discuss what is happening amongst themselves. See Contractors Set Up IR35 Group to Organize Resistance – Join Up

The Tesco Bank Contractors IR35 decision is yet another blow to contractors. They have been taking these blows from different Governments for 20 years now. Perhaps it is about time they fought back. There is an election coming up soon

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