RBS (Royal Bank of Scotland) has silently taken a u-turn about its plans to ‘continue to engage PSCs under a new IR35 from April’. The institution now opines that it will no longer use these types of contractors after February.
The bank announced that all contractors who worked as limited companies have to seek the option of an umbrella company or PAYE. The given deadline for this shift is February 28th.
The memo describing this turn of events have already been received by the relevant contractors in this month. However, the bank had already gone for this volte-face by early August.
One of the indications was the manner in which the bank extended contracts. Instead of going for the standard 3-month or 6-month extensions, some PSCs got an extension lasting seven months. This means that their tenure ends around the deadline date in February.
Interestingly, in July, rumours flew that RBS was making efforts to seek guidance on how PSCs could be retained. A spokesman clarified that they still planned to work with PSCs. He also said that the bank was waiting for the in-coming draft of the IR35 legislation.
The memo – which was distributed via an agency – said that RBS and the agency worked hard to make sure that workers could be supported amidst the new changes. However, the changes in IR35 are a bad news. After 6th April 2020, majority of the contractors – who use their own limited company – can no longer be employed by RBS.
Acumenica’s Alan Broome believes that contractors, whether they belong to RBS or not, are not going to like this news. Still, he does not find anything wrong with the decision of RBS. He also drew parallels between RBS’s announcement with the ‘cease and desist’ PSC policy by Tesco Bank.
The IR35 expert, Kate Cottrell, is waiting for November 6th – when the Budget 2019 is out. This is because it will also release more details on the legislation, which may help the industry to seek new options. She stated:
“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.”
Chartergates, an employment law firm explained that it is the prerogative of end-clients to decide how to apply the IR35 regulations. They can use risk profiles and get consultation before making any final decisions.