Deloitte, Metro Bank, Zurich, Three UK and BoI ban limited company contractors, as IR35 reform looms

Deloitte, Bank of Ireland (BoI), Three UK, Zurich Insurance and Metro Bank are all banning limited company contractors because of private sector IR35 reform -- in just eight weeks’ time.

The five are on top of BP, UST and Ruffer, all of whom ContractorUK also understands will stop hiring PSCs ahead of the April 6th off-payroll rules, but the trio are yet to respond to a request for comment.

These eight firms, which span the professional services, banking, telecoms, insurance, oil, digital and investment sectors, are in addition to a US giant valued at $15billion who says it will no longer accept non-PAYE hires either.

This wide spread is a change on 2020 (when IR35 reform was initially expected), because then, 'umbrella-only' policies on contractor hiring were largely confined to financial services.

'Fingers burnt from CEST-related SDS challenges'

James Poyser of, where details of some of the new PSC bans surfaced, says firms that halted the use of such workers last year, are by and large halting them this year too.

“Those who set out to deliver fair determinations in 2020 are doing so again this year… but very few of those who [imposed] PSC bans in 2020 are reversing that choice”, he says.

“[And] a number of end-clients who used CEST last year are moving to PSC bans this year, no doubt due to having fingers burnt by the hassle of dealing with CEST SDS challenges”.

Some contractors who in late January learnt that they will be terminated quickly (early March is common), if they fail to ditch their ‘Ltd’ say ‘concessions’ to the bans can be on offer.

'Covid hurting contractors' prospects'

Contractor accountants InniAccounts, where Mr Poyser is CEO, agrees that “exceptions” are often available, albeit only for the highly-skilled who can ‘name their rate.’

But VIQU says exceptions are the exception.

“Last year, we had a few contractors who stayed in post because the company increased their daily rate significantly,” begins the technology staffing agency’s boss Matt Collingwood.

“But this year, we’ve had next to none of these situations arise. This may be as some firms are under the impression that contractors will stay put due to covid hurting their prospects.

“Or it’s perhaps because some firms may think the IR35 reform start-date will be postponed. However, my personal feeling is that the off-payroll rules will not be shelved again.”

'Concerning that many clients have done absolutely nothing on IR35'

An expert on the rules, Kate Cottrell, says January-February is proving “as expected”, to be the time when “all those tentative help requests” from last year “reappear,” as April looms.

“Many end-users have done absolutely nothing in the interim,” she says. “It’s concerning but understandable due to covid, about the sheer number who are only starting to act now.”

“As for PSCs, many were outside IR35; got threatened with inside from 2020, then with the delay told they can carry on as before. Only to now learn clients will revert to 2020’s stance.”

'Proper contractors?'

BP is a case in point.

The oil giant told its limited company workforce some 10 months ago that its decision to ban them will be deferred until 2020. Last week, it reinstated that decision.

“Why they bothered going back on the PSC ban last year when the delay was announced [is anyone’s guess],” says a now-former BP contractor.

“Could it be they really prefer having ‘proper’ contractors? It’s weird when you consider [BP] has enormous experience of using contractors across the business”.

He added: “My sense is that these types of bans have nothing to do with taxation or rights, as much as it is about companies not wanting [to make] changes that they don’t have to make.”

'Big-boy clients don't care about losing the talent'

Speaking on condition of anonymity, an ex-tax officer answered the question of why an end-user might have rolled back a ban, only to end up imposing that same ban 12 months later.

“No doubt between 2020 and now, the banners will have received pressure from HMRC,” the ex-officer said. “Clearly the ‘big boy' clients don’t care about losing the talent they need.”

Potentially even more galling, some contractors say the ‘outside’ IR35 determination they secured in run-up to reform’s false-start last year, has now been reversed.

Or in the case of PSCs at an end-user now banning PSCs, such ‘outside’ decisions appear to be redundant, as to avoid the rules entirely, the organisation simply won’t use PSCs anymore.     

'Refining the engagement process'

Not that any of the five firms that confirmed they are banning limited company workers sound like they regard their decision that way -- as a way to sidestep the April 6th legislation.

At Metro Bank, where contractors say the IR35 policy has reversed from potentially outside IR35 to a PSC ban (and therefore no IR35 status assessment at all), a Metro Bank spokeswoman said:

“Over the past 18 months, Metro Bank has been refining its engagement process with non-permanent colleagues to ensure that the process is in line with the most up-to-date legislation changes.”

Asked too to explain its IR35 reform stance, a spokeswoman for Deloitte said: “We need to ensure that we’re compliant with the government’s new off-payroll working rules.

“[The] complexities of engaging with contractors through PSCs mean this is no longer a viable option…[so] we will engage them through…umbrella companies or agencies.”

'We are complying with HMRC rules'

Similarly suggesting their organisation to be reflecting the incoming, April legislation, rather than bypassing it, a spokeswoman for Zurich Insurance said:

“In light of the changes to the legislation relating to how businesses work with contractors, [our company has] reviewed its approach and will be engaging via umbrella companies/PAYE from April. 

“We believe this is the best approach for our business to ensure we are complying with the HMRC rules.”

'In line with the industry'

Despite being asked to, Zurich did not explain a statement it previously put out on its PSC ban, which says that by banning, the insurance company is acting “in line with the industry.”  

Recruiters Morgan McKinley, a specialist in financial services placements corrected: “We have not seen a blanket decision across industries.”

Similarly, IR35 status firm Qdos said of Zurich’s ‘in line with the industry’ comment: “It’s an odd statement to make, given it isn’t entirely true.

“Looking across the insurance industry, there are firms that will continue engaging [limited company] contractors beyond April 6th.” 

'Lack of respect'

Or perhaps simply too much is being read into Zurich’s wording, hints a former consultant for HSBC, where the PSC ban model because of IR35 reform was first conceived in 2019.

“The phrase ‘in line with the industry’ simply means, ‘Those guys over there have done it; there’s no downside to us financially, all the hit is on the contractors, so why are we bothered?’” the ex-HSBC consultant said. “It displays a lack of respect for their workers.” 

Qdos’ chief executive Seb Maley believes the insurer’s ‘in line with the industry’ claim is not the only part of Zurich’s decision which is hard to fathom.

“Zurich Insurance’s risk-averse approach to IR35 reform is disappointing.

“This is particularly the case given the business clearly understands the legislation as it helps contractors and companies safeguard themselves from the risks associated with IR35,” he said.


Ms Cottrell, co-founder at status advisory Bauer & Cottrell and a former tax inspector echoed: “How ironic Zurich’s position is.

“They could actually find themselves being interviewed by HMRC; where HMRC is investigating a contractor under IR35 – who is currently providing services to Zurich, and at the very same time, Zurich could be paying out defence fees because the contractor is insured by them!

“So I wonder how this would work with the ‘reasonable chance of success’ clauses found in most policies. I totally understand that a PSC ban is a commercial decision [for all end-users], but this seems a bizarre situation for this insurance organisation to find itself in.”

'Treating people unfairly comes with consequences'

Online, some of the reaction from contractors to the limited company ban at Zurich Insurance is similar to the reaction to the limited company ban at Three UK.

“Well, I’ll be moving my phone carrier then,” posted one contractor about Three UK, while ironically on a contract with Deloitte.

“Treating people unfairly comes with consequences,” added another contractor. “So I wonder how many of those [PSCs] forced out [at Three UK by not relinquishing their limited company] will change their mobile phone network as well [as their job].”

“Pity,” chimed in a third limited company contractor. “I’m with Three UK for some data services. Guess I'll have to bail when the contract is up.”

A Three UK spokeswoman said: “As a consequence of the changes in the off-payroll working rules, due to come into effect in April 2021, moving forward Three UK will engage with contractors on a pay as you earn basis.”

'Paying more, in this dystopian landscape'

But potentially losing customers or subscribers is not the only sting facing companies that ban suppliers who are incorporated businesses, reminds IR35 contract reviewer Mr Maley.

“Insisting that contractors go PAYE irrespective of their IR35 status is not the answer to reform. Firms that do this could find themselves paying anything up to 25% more per worker engaged,” he warned.

Andy Vessey, head of tax at Kingsbridge Contractor Insurance agrees. “There will no doubt be organisations that will still take a risk-averse approach and will not want to engage with the off-payroll rules, so therefore will only hire contingent workers via umbrellas or agency payroll.

“However, I would hope that the dystopian economic landscape that awaits us all, will cause some end-clients to reconsider their hiring strategies and take a more flexible approach, particularly where there is 13.8% employer NICs to be saved,” he said.

'Not representative'

Bank of Ireland recognised the National Insurance issue in the most plain-speaking statement of the five confirmed PSC-banning clients.

A BoI spokeswoman said: “In preparation for the new IR35 legislation, Bank of Ireland UK, in line with other UK banks, will no longer utilise contactors operating through personal service companies.  

“Instead we will continue to fill vacancies via fixed-term contracts and permanent roles or source resources via an….umbrella operation that facilitates the payment of National Insurance Contributions and deducts the appropriate income tax for each individual.”

“Sorry, but is not representative of the…the whole financial services sector”, said a status adviser who declined to be named.

“While some of the big banks look set to stop working with contractors due to IR35 reform, there are plenty of other firms that will continue engaging genuine contractors outside IR35.”

'The worst of both worlds'

“It’s a nutty, crazy, stupid stance,” a like-minded recruiter scoffed, accusing any organisation that bans PSCs outright.

“There is no need for it whatsoever and it will put the clients doing the banning at a huge hiring disadvantage. In the staffing trade, we’ve got a sophisticated, technical term for this – ‘the worst of both worlds!’”

A computer contractor, now retired partly he hints because of the IR35 debacle, last night sounded sympathetic to such agents.

“End-users banning limited company providers know they can simply dump their excess contractor resources and hand off the messy issue of payrolls to the agencies, who are in line for HMRC tax penalties under this framework, which bites the UK in just eight weeks.

“Frankly, it’s a bloody mess,” he continued. “And it can be avoided. Just look at the public sector, which has two years’ exposure to these rules and who are continuing to take on outside IR35 workers exactly as before.”

'Huge exodus'

“HMRC will love this,” said Orca Payroll’s Robert Sharp, writing online in response to reports of a one end-user deciding this month that its entire PSC workforce is inside IR35, when previously it was not.

He added: “I dare say there will now be a huge exodus of [this company’s] off-payroll workers. What an absolutely brilliant way [for this company ] to destroy its brand.”

In their statements on their own PSC bans, the five companies which confirmed them to ContractorUK made positive remarks about contractors or flexible staff.

'Dynamic, important, diverse'

Deloitte said its “independent contractors and consultants bring a huge range of skills” to its business, and that “this dynamic and flexible talent pool is very important to us”.

Metro Bank said its “non-permanent colleagues are an important part of” the bank and ‘help it to deliver its high quality services to its customers.’

Zurich Insurance described contractors as its “colleagues,” saying it will work closely with them in the run-up to April 6th to “ensure they’re aware of the tools and support available.”

Bank of Ireland said its approach would ensure the bank “can maintain a flexible and diverse talent base with the specialist skills required to support” its business.

Three UK said its approach to contractors was always to pay them market rates, and “that policy will remain unchanged.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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