In the Budget, the Chancellor announced that it will now be the duty of the public sector to make sure personal service companies and intermediaries (PSC) pay the correct tax.
From April 2017, individuals working through
their own limited personal services company in the public sector will no longer be responsible for deciding whether the intermediaries’ legislation (known as IR35) applies to their PSC and paying the relevant tax and NIC.
Instead, the public sector engager, agency or other third party in the supply chain closest to the worker’s PSC will have to decide if the worker would be an employee if they
were not contracted to undertake the work via their PSC. If this applies, the engager will have to account for and pay the relevant tax and NIC liabilities through the PAYE RTI system. HMRC has published a technical
note explaining the proposals with examples.
The organisations checking intermediaries will include:
- Government departments, legislative bodies and the armed forces
- Local government
- NHS
- Schools, further and higher education institutions
- Police
- The British Museum, BBC, Channel 4
- Transport for
London
- Publically owned bodies
It will be the engagers’ duty to calculate the deemed employment income.
It is no secret that the government does not like PSCs, so expect to see attempts to extend this legislation to individuals
working through their own limited personal services company for non-public sector bodies in the future.
Noel Guilford