The idea of contractors working for big companies in what amounts, in many ways, to a self-employed or even an employed basis, but instead invoicing through their own limited company, is not new.

Neither is HMRC’s interest in whether these contractors are paying their fair amount of tax. They are certainly paying the correct amount but it works out, significantly in some cases, less than they would pay if they were on a salary from the company they are working with.

Gradually, HMRC has made it more difficult for contractors to operate this way. Their latest idea has been to pass the decision as to whether they are entitled to continue in that way from the contractor to the company he/she is working with. They introduced it in the public sector in 2017 and widened it to include private companies, save for the smallest of them, from April 2020.

Confusion for contractors over how their tax would be dealt with

HMRC instructed companies to assess contractors on an individual basis to determine their status before notifying the contractor of their decision. Some did so in good time, but many left it until the last moment, meaning that contractors had no idea how their tax was going to be dealt with from this April and no time to consider whether they wished to stay on in a changed status. It was chaos.

Many big companies, especially the banks, ignored the government’s instruction and simply told all their contractors their tax status would change from April 2020. No discussion or negotiation; no right of appeal. It was appalling behaviour, typical of the big companies involved.

In the strange times of the last four months, one of the lesser publicised reliefs announced by the government was a year’s deferral of the implementation of the new legislation. It was late in the day but contractors breathed a huge sigh of relief. It was short-lived. The big companies, again led by the banks, refused to acknowledge the deferral. Contractors were left with a take or leave it choice.

Contractors have had an uncertain time, like the rest of us, and little support in the current economic conditions. Their one ray of hope was extinguished overnight by my old ‘friends’, the big-business bullies.