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Tfl Bans PSC Contractors IR35 Reforms

Tfl Bans PSC Contractors Ahead Of IR35 Reforms

The potential for IR35 reforms to damage opportunities for contractors working in the public sector was demonstrated last week, when Transport for London introduced a blanket ban on workers who operate through their own limited company.


The ban, which was reported in ContractorUK, will be enacted to remove the risk of TfL being penalised for making a decision about workers’ tax status that HMRC disagrees with.


According to the ContractorUK report, TfL will impose this ban from 17 February, to allow existing PSC workers to convert to PAYE or Umbrella worker status and to replace those workers who choose to stop working for TfL.


ContractorUK quotes a TfL insider who indicates that most contractors operating through a PSC are “tending towards leaving”.


A problem for contractors and the public sector


We previously warned that the reforms to IR35 – in which the public sector end-user assumes responsibility for determining the tax status of contractors operating through a PSC – could cause problems.


We noted that risk-averse parties in the public sector were likely to simply payroll all contractors to avoid receiving a bill for unpaid taxes, not to mention the administrative hassle of assessing all contractors’ status on an ongoing basis.


And, we noted that the likely result of this would be contractors either leaving the public sector, or demanding higher rates for taking these roles.


In the case of TfL, this seems to all be happening before the reforms to IR35 even take effect. And, judging by the comments of the insider quoted in ContractorUK, this could affect staff numbers, which could damage the service provided to London’s public transport users.


The solution


Here at Contracting Scout, we’re committed to supporting contractors and the important role they play in the public and private sectors.


As a result, we have access to a solution that will assume many of the risks the legislation changes propose. This will guard against decisions such as those taken by TfL, while remaining 100% compliant with the new legislation.


We’ll be sharing more details on this shortly, but if you have any concerns or want to discuss how we can help in the meantime, do get in touch.