Royal Bank of Scotland will compel all of its existing limited company contractors to transfer to either PAYE or an umbrella company by February 28th, according to a leaked memo.
The move, likely to be a strategy by the financial services giant to avoid IR35 obligations under the incoming Off-Payroll legislation, follows similar policies recently announced at Lloyds, Barclays, HSBC, Morgan Stanley and GlaxoSmithKline.
The pattern is indicative of how larger hirers may opt to deal with the forthcoming IR35 rules, which will shift responsibility for IR35 status assessments from individual contractors to the companies that hire them. Many companies are concerned that the new IR35 rules represent a significant risk and administrative burden, but forcing contractors to use PAYE umbrella companies mitigates this.
Commentators believe that whilst RBS only announced its new contractor policy in the last month, it had been agreed upon as far back as early August, due to a series of atypical seven-month contract renewals which are due to terminate on or around the February deadline.
In July, RBS had publicly committed to continue to use limited company contractors, pending the technical details of the draft Off-Payroll legislation.
“We have been working hard behind the scenes with RBS to ensure we are set up to support our workers through the necessary changes required next year,” the RBS-agency memo says.
“The government are introducing changes to IR35 … this means that after 6th April 2020 most contractors won’t be able to work for RBS via their own limited company.”
25th October 2019.