Barclays planning to scrap its contractor workforce
Following reports that HSBC will stop engaging PSC contractors as a result of IR35 reform next year, it has now become apparent that Barclays will also refuse to work with contractors operating through limited companies before April 2020.
In an email, which was sent to UK line managers, the bank explained that “as a consequence” of changes to the IR35 legislation, which will see private sector companies tasked with administering IR35 status and often held financially responsible by HMRC for any mistakes, Barclays “will no longer engage contractors who provide their services via a personal services company.”
Barclays also stated that from 1st January 2020 it will only engage workers on a PAYE basis, having ruled out extending the projects of the limited company contractors it currently engages past February next year.
“Short-sighted” but not a “typical response” to reform
In reaction to the news, Qdos CEO, Seb Maley, described the move as “short-sighted” and “unnecessary” given the bank will “lose out on the flexibility and savings achieved when compliantly engaging contractors outside IR35.”
However, he also made the point that “this is not a typical response” to IR35 reform and nor does he expect it to become one. With contractors understandably concerned by further reports of a bank taking a risk-averse approach to IR35 reform, Maley said “behind the scenes there are many private sector businesses quietly preparing to compliantly engage contractors outside IR35 from April 2020 onwards.”
“A taste of the chaos to come”
IR35 lobbying body, IPSE, criticised the Government for rolling out controversial changes to the legislation which will see contractors lose the right to determine their own tax status. Deputy Director of Policy, Andy Chamberlain, said Barclays’ decision was “just a taste of the chaos to come” and called on the Government to “halt and reconsider the changes to IR35.”
He then urged other businesses not to follow Barclays’ lead, arguing that it “makes a mockery of the Government’s claim that the genuinely self-employed won’t be affected by the April 2020 rules.”
Barclays “not prepared to take any risks”
IR35 commentator and CEO of Contractor Calculator, Dave Chaplin, echoed IPSE’s concerns, describing the move as a “direct consequence of very bad legislation” and that in giving contractors no choice but to work PAYE or leave, Barclays has shown it’s “not prepared to take any risks come April 2020.” He also said “it’s absurd to suggest that 100% of the contractors working on critical Barclays projects are caught within IR35.”
As previously mentioned, Barclays is not the only bank apparently taking this drastic course of action. HSBC is also planning a workaround to IR35 reform, while it has also been reported in Computer Weekly that Lloyds is also set to offer contractors an ultimatum – a course of action that contractor accountancy, QAccounting recently dissuaded engagers from doing.
Have you been impacted by Barclays’ announcement?