Scottish Southern Energy IR35 Decision – All Contractors Must Drop PSCs

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Scottish and Southern Energy IR35 Decision
Scottish and Southern Energy IR35 Decision

Scottish Southern Energy IR35 Decision

The Scottish Southern Energy IR35 decision is that all contractors who want to keep using their personal services companies must leave the company. There are no offers of permanent jobs. Contractors can join an umbrella company. They can go PAYE with the agency.

Scottish and Southern Energy are simply solving their IR35 problem by the blanket banning of PSC contractors altogether.

All contractors who want to keep their personal services companies must leave by the end of March. No PSC contracts are being renewed beyond that date.

Contractor Questions on Scottish Southern Energy IR35 Decision

  1. Why does the Scottish Southern Energy IR35 decision not seem to make sense?
  2. What will happen to the flexible workforce?
  3. Why are the Government allowing this to happen?
  4. What is terrorising companies into dumping their contractors?
  5. Why the Government must know of Scottish Southern Energy IR35 decision?

Why does the Scottish Southern Energy IR35 decision not seem to make sense

The Scottish Southern Energy IR35 decision seems to fly in the face of common sense. Many of their contractors will leave.

Their contractors are working on computer systems that are crucial to the company. SSE will now not have the headcount to get their projects finished on time.

They may not have the skills and experience to get the projects finished at all. After all most of the permanent staff developers on a project have less than 2 years experience. Experienced contractors are usually brought in to do the development roles while permanent staff manage the projects.

SSE are likely to be left with plenty of chiefs but not many Indians on their projects.

What will happen to the flexible workforce

This is a supreme example of the new IR35 rules severely disrupting a company. SSE would have been working to what they would see as their maximum efficiency in terms of the breakdown of the numbers of contractors and permanent staff on their projects.

Government ministers praise the flexible workforce. Well the Scottish Southern Energy IR35 decision means there will be a vastly reduced flexible workforce at SSE.

As SSE were working at what they say was their maximum efficiency previously this decision means that they are working at a level below that now. This is not good news for the company, their profits and the tax they will pay.

Why are the Government allowing this to happen

I hope the Government and HMRC take this into consideration when they are calculating how much the extra tax the IR35 changes has brought them in. Many of the contractors got rid of will not be paying tax for a while either. I bet they don’t count that lost tax.

If the Government and HMRC thought they were going to pull in a whole load of extra tax from contractors at companies like SSE then they are severely mistaken. They won’t pull in a penny from those that leave after the end of March. Indeed they will lose the tax money they got before from the contractors.

Surely this cannot be what they wanted when they decided to introduce the IR35 rule changes in the private sector.

What is terrorising companies into dumping their contractors

The Government is currently doing a review of the IR35 changes. Despite saying that they would review IR35 prior to the election they are now saying that this review is just to help implement the IR35 changes as efficiently as possible.

It looks like the Government threats of financial punishments on companies who get their IR35 assessments of their contractors wrong are too great. Rather than taking a chance on a massive fine some companies are deciding that they will take no more contractors in future.

Some companies, like SSE, will take them on as off payroll workers paying PAYE.

Why the Government must know of Scottish Southern Energy IR35 decision

Someone who is involved in the IR35 review with the Government needs to let them know what effect it is having on companies like SSE.

The Scottish Southern Energy IR35 decision was surely not what the Government intended.

They must change course on this before it is too late and great damage has been done to all the UK’s major companies.

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    2 COMMENTS

    1. Pretty sure legislation says all these firms cannot simply apply blanket decisions. I wonder what hmrc will do about this?! Nothing no doubt.

    2. I have just had meetings with sse about this today and been told that I need to go PAYE or leave option to go through umbrella company was not even given so people with in sse don’t know what the company line is

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