Banner Default Image


Have Barclays buckled too early under the new IR35 regulations?

over 2 years ago by Nathan Baldwin

Barclays, Albion Street, Leeds

Earlier this month Barclays, one of UK’s leading banks, announced that they would ‘no longer engage contractors who provide services via a personal services company, limited company or other intermediary’.

Instead, they will only employ Pay As You Earn employees or those working on renewed contracts. This will likely have a huge impact on a large portion of the bank’s workforce, especially tech freelancers and contractors, and could lead to hundreds of contracts being terminated.

Barclays have explicitly stated that this bold move is a direct result of a company-wide precautionary measure against the new IR35 regulations. According to their statement, any off-payroll contractor will have until February 2020 to transfer over to PAYE or on-payroll contracts, after which any off-payroll contracts will be terminated. But some important questions remain around the immediacy of the decision.

Could Barclays be guilty of ‘jumping the gun’ on a regulation that will only affect the private sector mid-2020?


Why risk the potential loss of a significant portion of skilled employees with almost immediate effect?


Is IR35 really that much of a threat to national corporations?

Well the answer to these questions lies in the public sector, more notably the BBC. In September 2019, the HMRC won three IR35 cases against three top BBC presenters. The presenters in question were technically self-employed and were ‘providing services’ to the BBC via a personal service company. After an investigation, the IR35 regulators determined that the presenters were ‘on the wrong side of IR35’ and claimed they owed the HRMC £920,000 collectively.

Naturally, each case went to court where the judge concluded that the presenters were liable to pay the taxes back in full. This sent ripples through the public and private sectors, the presenter’s reputation, a long with the BBC’s, was thrown into question, proving nobody was above IR35.

As a bank, trusted with millions of people’s money and financial data, being taken to court and potentially losing to the HMRC wouldn’t attract the best publicity.


But other than a damaged reputation, what serious implications could IR35 have on Barclays?

Well this could be a clue, the defence of the three BBC presenters caught out by IR35 regulators stated that it was in fact the BBC who was liable to pay the £920,000. The presenters claimed that the BBC urged them to work via a personal service company as this would prove beneficial for both parties.

Whether the accusation was true or not was irrelevant, the damage had been done. It involved the BBC in the case, no doubt requiring them to invest considerable time, resources and legal costs preparing their own defence, and further damaging its already fractured image.  It was perhaps this that sparked the impetuous response from Barclays.


The domino effect

Barclays aren’t the only company to announce drastic changes in preparation for the 2020 IR35 roll-out. It was recently revealed that GlaxoSmithKline, the British based global pharmaceutical giant, sent letters 1,500 to its British based workforce urging them to check that their employment status was compliant with IR35 regulations. GSK has yet to make an official announcement on what it plans were regarding off-payroll employees.

HSBC has also been rumoured to have taken the same route of Barclays. According to an online UK contractor website HSBC has introduced a ‘quit or go perm’ policy to its contractor workforce. According to the report, in some areas of the worlds largest bank, like HSBC Digital, all tech contractors and off-payroll staff have been given the bitter ultimatum. Whilst in other areas of the business, contractors have reportedly been told they can remain self-employed only via a personal service company.


What happens next?

Certainly, Barclays won’t be the first and last company to publicly react to IR35. Over the coming months more and more businesses across the UK will announce their own preparation plans. What is more uncertain is what happens to the thousands of contractors currently working across the UK.  Will they conform to the new IR35 regulations, admitting defeat at the hands of PAYE? Or will they rise up in unison and protest for new reform? And if so, what will happen to the employers who depend on their skills, knowledge and services?

For more information about IR35, you can download our IR35 E-book here, or visit the IR35 portal to find the latest IR35 events, news and more.