What should banking contractors do now following the recent bank announcements?

Following announcements by various large banks in response to the Private Sector Off Payroll reform due in April 2020, many contractors will soon find themselves being forced into either permanent roles with their client, or having to go PAYE or inside IR35.

There is clearly a retrospective risk with HMRC claiming that you were always inside IR35.  On receipt of any communication such as this contractors should do the following:

  • establish with your accountant the financials – how much will you earn inside IR35 with no relief for travel expenses post April.  Can you live on it and are you prepared to do so?
  • What does your current contract state re termination?  Remember if you need to exit, this should be considered in relation to invoicing timescales.  You probably need to create your last invoice in January or February to ensure payment (gross) before 6 April 2020.
  • Now is the time to properly evaluate your current IR35 position.  Get a formal review and if outside IR35 collect all the available evidence to prove this to protect yourself against subsequent HMRC investigations.
  • If you have any sort of IR35 insurance check with your insurance provider that you will still be covered if you have received a communication like this.  Does it amount to a change of circumstances such that the policy is no longer valid?
  • Raise all your issues with the end client and with your agency – now is the time to have those conversations.

It may be that we will see these banking policies evolve, just like we saw with the public sector off-payroll rules.  Many had to change their policies to ensure that they could engage with contractors outside IR35 to attract the skills and talent they need.  In the meantime all can take some action if only to properly understand all the implications of what appears to be happening now.

If you are contracting at one of the banks concerned and would like to check your IR35 status now, please see our review services.