Fidelity International joins Lloyds and HSBC in halting PSCs from consultancies

Fidelity International Ltd has become the third financial giant to use April’s IR35 changes as a basis to ban its external consultancies from supplying it with limited company contractors.

The investment management services firm said that all resources working via its partner consultancies must have tax deducted at source, via umbrella companies or internal payroll.

Fidelity added in an internal message to the consultancies that ‘FIL will require evidence’ that full PAYE and NIC has been operated, and may request an “audit trail” to be provided.

'No surprise that two has become three'

In a follow-up memo mirroring the consultancy PSC ban led by HSBC, copied by Lloyds and now in place at FIL, the firm said non-compliance would result in termination and penalties.

And as two financial behemoths have already halted third-party limited companies, it is “no surprise” that FIL (a comparatively small user of contractors) now has too, a tax expert says.

But it was still a nasty surprise for the tiny consultancies on the receiving end – particularly the one consultancy to have contracts with all three ‘banners’ – Lloyds, HSBC and Fidelity.

'Furious, threatening'

“Again, and like the action we have taken with those two big banking customers of ours, we have written to Fidelity to robustly challenge their decision to ban us supplying it PSCs.

“But,” added the consultancy’s founder, “we’re fully expecting either no reply or a rejection. Given the furious, threatening reaction we got from challenging the other banks, perhaps that’s best.”

Another of Fidelity’s consultancies blasted: “FIL are ignoring the small companies exemption, which is meant to exclude non-large/mid-sized firms from the IR35 reforms."

'Nothing to add'

It added: “Fidelity’s ban on consultancy-provided PSCs will severely damage smaller companies relying on niche freelancers. Why does Fidelity want to put small firms out of business?”

A spokeswoman for Fidelity acknowledged ContractorUK’s request for comment – including a comment on FIL’s own hiring ban on PSCs, but said that the company had "nothing to add."