HMRC’s IR35 reform is putting pressure on a multitude of public sector companies including Travel for London. TfL has been the first to react to the Public Sector reform by implementing a complete ban on contractors working through their own limited company. They decided to tackle the issue of non-compliancy by sending out a memo to all of their PSC workers and stated that they ‘won’t allow limited company workers to continue working for [TfL]’. Additionally, ‘converting to PAYE or Umbrella worker status’ would be required if PSC workers wanted to continue working beyond April 6th – when the IR35 public sector reform kicks in.

HMRC has stated that it will be providing public bodies with an online tool to help them decide if a PSC worker is legitimately self-employed or should, in fact, become PAYE. However, the Online Status Tool is still being eagerly anticipated by all within the industry and we are yet to determine whether other public sector bodies will use this and assess each engagement individually, or take the same stance as TfL.

With further clarification required on certain aspects of the memo including only keeping on ‘critical staff’, contractors working for TfL will be feeling unfairly targeted, especially with the many changes contractors have faced, more so in the past year.

The memo also stated a date of 17th February by which PSC workers will need to be compliant. Many of these contractors will most likely decide to leave and secure contracts elsewhere, with significant numbers considering moving into the private sector or going permanent. IPSE has also commented on the public sector reforms stating that ‘HMRC have not ruled out investigating retrospectively’ which is why it is essential to write up new contracts, which are properly worded, from April 6th onwards. Those who choose to remain working in their current roles within the public sector will be taking the opportunity to search for an umbrella company that offers professional, compliant and straightforward service.

Cloud9 Umbrella offers a fully compliant PAYE payroll service so for all contractors who find themselves no longer able to benefit from a limited company, falling inside IR35 legislation, or simply don’t want the administrative hassle then we can help.

Cloud9 Umbrella undergoes regular external audits, implemented by Professional Passport, ensuring that we continue to operate correctly within all government legislation. Our affiliation with PRISM ensures that we will always be up to date with the latest information and legislative changes within the industry. Check out our blog here.

We are committed to making contracting both transparent and easy by offering a simple and efficient on-boarding process for both contractors and agencies. If you would like to find out more information regarding how we work and how the public sector reform may affect you, then contact us today.