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Worried IT Contractors! IR35/off payroll rules.

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I have quite a few anxious IT contractor clients who are getting increasingly worried about the off payroll rules coming in on the 6 April 2020. One paranoid soul even asked me if I will still be able to trading after 6 April 2020 and was worried he would be left 'deserted' like all the Thomas Cook passengers!

More and more of my clients are contacting me about how to close down and the tax implications, etc. In addition, I am hardly getting any new referrals coming through which makes things doubly worse (although I slightly attribute this to the uncertainity over our trading relationship with the rest of the world) .

I believe Lloyds, HSBC, Barclays, M&G Investments and Morgan Stanley will no longer be using ltd company contractors from 6 April 2020.

Is there anyone else in this situation? What are you going to do? 

Any ideas of how many of your clients will close down? Judging by emails I am expecting at least 20% of my client base to disappear.

I know this sounds horrible but if one (or two) of the large contractor factories (I mean accountancy firms) collapse hopefully this releases a few thousand contractors into the open!!!

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By Sheepy306
03rd Oct 2019 22:03

“ I believe Lloyds, HSBC, Barclays, M&G Investments and Morgan Stanley will no longer be using ltd company contractors from 6 April 2020.”

Do you know that for definite? It’s slightly contrary to what i’m being told, a lot are still waiting for a definite decision and last minute reprieves, eg a Boris review. Qdos seemed to be fairly positive the other day (although perhaps it’s in their interests to remain positive)
As much as anything it’s up to the contractors to balance and make a commercial decision as to any offers that they may have before deciding to pre-empively shut down.

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By yusuf_yp
04th Oct 2019 00:48

Barclays / Lloyds and HSBC contractors have been given notice, become PAYE or leave. This is the blanket approach the FS market is following.

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Replying to yusuf_yp:
Psycho
By Wilson Philips
04th Oct 2019 11:07

But that is not the same as saying that the banks etc will refuse to engage ltd companies - or do the notices actually say that the workers need to go on to the banks' payroll as individual employees (as opposed to simply applying PAYE to the payments to PSCs)?

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By Matrix
04th Oct 2019 06:40

I have two with HSBC who will go perm or leave and two others outside banking where we don’t know how they will be assessed. I have quite a lot of clients who provide genuine short term contracts who need to address the rules but this becomes a commercial issue with their client.

There is plenty of other work out there.

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By ireallyshouldknowthisbut
04th Oct 2019 09:19

I have a HSBC one I expect to go perm.

But yes, I am expecting significant fall out from our contractor client base. Including some consultants and other similar style business, this is about 25% of my turnover, and by far the most profitable bit too so its a significant hit our side, but quite frankly it was going to happen sooner to later which is why I have never gone in any deeper with that side of things.

I expect to lose about half of them initially (the pure contract people, less so the 'proper' management consultant types who are probably outside of IR35 even using the CEST tool) , and then some drift back as end clients suddenly realise "hang on a minute, we don't have any staff to deliver X...."

So in short, I will have about 4-6 weeks extra work to pull in over the next 12 months to cover it back. That's quite a lot on top of normal churn. The garden is going to be lovely at least!

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By SouthCoastAcc
04th Oct 2019 10:03

Most of mine think they will be okay, I hope so as like ireallyshouldknowthisbut they are very profitable for me

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Lone Wolf
By Lone_Wolf
04th Oct 2019 10:54

We don't have too many guys that will suffer from this, but would be interested to know what others though of this move.

With the financial industry taking the blanket approach of moving everyone on to payroll, is this a tacit admission that they were never really "contractors" in the first place, or are they just covering their own backsides and unwilling to take the risk?

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Replying to Lone_Wolf:
Psycho
By Wilson Philips
04th Oct 2019 11:05

I don't see that any 'tacit admission' is required - it may well be the case that they already consider the worker to be an 'employee' but under current rules there is no requirement (nor indeed any facility) for them to do anything about it. The problem is currently one for the worker and his PSC.

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By SteLacca
04th Oct 2019 11:01

It makes me very glad that I only did 6 months at a contractor conveyor belt accountants. I imagine they are all rather worried now.

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By Mr_awol
04th Oct 2019 11:01

We have had about a dozen or so in the Glaxo review (all of whom are fighting it) and a few from other sectors looking to pack up.

Personally I'm quite happy with this. Yes it's easy/profitable work generally but I really don't care for the contractor market and am more than happy for it to be shut down. Many of my more dislikeable clients are 'contractors'.

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Jennifer Adams
By Jennifer Adams
06th Oct 2019 17:42

I have some that will be affected. I've told them to take whatever overtime is going /dont go on holiday before 5 April but just work - so the pain of suddenly becoming PAYE wont be as bad as they will have some extra money to tide them over.

But I have also told them to look around and see whether there are any 'small companies' that they could work for as they will be exempt.

See here for a good text on what is happening on the ground and what to do :

https://www.itcontracting.com/category/ir35/

"Any contractors engaged by small companies will continue to operate the IR35 rules as they do currently – and the responsibility for determining their employment status will not pass to their clients."
However... whether those 'small companies' will appreciate that they will be exempt is a different question.

Those who will be caught will have CT bills to pay as well as being taxed at source immediately so I've told them to get their accounts to me as soon after 31 March as poss so we can at least have an idea of the tax bills to come.

Barclays has already formally announced no company contractors.

Tax Insider have a 2 page guide to IR35 and the new regime = free

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