RBS is the latest bank to state that they won’t be using limited company contractors past February 28th. This sees the organisation going back on its previous statement that they would continue to engage PSCs. RBS have adopted a ‘cease and desist’ policy similar to the decision taken by Tesco Bank, requiring most of its limited company contractors to go PAYE.
While it remains to be seen how many of its limited company contractors RBS will take onto its own payroll, Tesco is favouring agency PAYE or umbrella over making its contingent staff permanent employees. The likelihood is that businesses will only be able to payroll limited numbers of additional staff in key positions.
Although the businesses that have gone PAYE only say that it’s a temporary measure, with the reforms less than 6 months away, there’s a need to mitigate immediate risk. A Tesco Bank spokesman said: “Like many other organisations, we are currently assessing how we manage off-payroll resource in order to comply with IR35 [reform]. Whilst we agree our future approach, we have implemented a number of interim measures.”
Kate Cottrell, an expert on IR35 said: “It may be that there could be other options available. But these – if any – will sadly be too late for many contractors where RBS and other end-clients have changed their entire engagement policy for contractors.” In this interim period, contractors are being advised that working via an umbrella company maybe be the safest option.
If you’ve been affected by blanket rulings or need more IR35 help, Umbrella Exchange can provide you with information on a range of IR35 solutions, including established umbrella companies that can meet your individual needs. To talk to a member of our team, call us on: 0203 393 3881