It has been announced that contractors operating through their own personal service companies, who work for the Public Sector and are unable to carry on working due to Covid-19, will now be eligible for the 80% furlough scheme if their contracts are ongoing.
This means than many doctors, nurses and IT contractors amongst others, will be able to access financial support.
No further detail has been provided at this point in time as to whether similar support will be put in place across private sector contractors who provide services through their own Limited Company.
Many contractors operating through a Limited Company will be aware of IR35 and how, for some time, HM Revenue & Customs have looked to enforce these rules more effectively.
The measures of support being provided for both employees and contractors will therefore take into account the different tax regimes employees and contractors operate within. The Chancellor has already indicated that there will be an increase in tax for the Self-Employed when the Covid-19 crisis is over, due to the support that has been made available to those in Self-Employment.
The extension of the Coronavirus Job Retention Scheme is being coordinated by the Crown Commercial Service and the Cabinet Office has provided guidance and outlined the conditions the measures will cover.
The Cabinet Office has stated by putting in place these measures its aim was to protect:
- the livelihood of contingent workers and avoiding claims of unnecessary statutory sick pay (SSP) from the supply chain;
- against the risk that some may attend work when they should be self-isolating, thereby potentially infecting wider teams and the broader general public;
- against the risk of losing critical workers to jobs in other sectors because they are not getting paid; and
- supplier revenue with the intention of keeping them solvent so they remain a part of our ongoing supply chain in the future
The Cabinet Office have made it clear that the announcement needs to be read in conjunction with the Procurement Policy Note 01/20 responding to Covid-19 and Procurement Policy Note 02/20 – supplier relief due to Covid-19.