It has been reported that from September 2019 HSBC will cease engaging limited company contractors, saving itself the job of having to assess them under a new IR35 rule from April 2020.
It is believed that HSBC will remove itself from April 2020’s obligation to decide contractors’ IR35 status, by making them employees or a third-party’s PSC or terminate the contract.
PSC contractors at key units like HSBC Digital have been informed by the bank that after one more contract extension, they will have to choose between being terminated or becoming employees. But for some contractors HSBC has softened the blow by placing them on a 'keep' list it has created by stating that they can stay on as long as they work via a third-party from September.
By removing a flexible workforce and replacing it with employees will remove any IR35 concerns for HSBC. However, if a role is on a project basis, using a properly insured PSC, working independently, it is most likely to be outside IR35 anyway.
Basically HSBC are saying that they are happy to pay extra for permanent staff - given the overheads they incur - or pay extra to third parties, rather than incur no additional costs at all and use contractors properly, outside IR35 parameters.
In the long term how companies decide to approach the off-payroll working rules from April 2020 will decide if limited company freelancing remains a viable option.
If you’re concerned about IR35, we can help, with comprehensive advice on how to stay inside the legislation.
Click here for membership details