IR35 / Personal Service Company Round-Up

Following the conclusions announced recently, by a leading law firm, that the forthcoming “Onshore employment intermediaries: false employment legislation” (proposed in the Finance Bill 2014), will not affect personal service companies, due to the way they normally pay their directors (salary, dividends, loan repayments, or loans), the Institute of Chartered Accountants Tax Faculty reported last week that HMRC has clarified that “the legislation will not apply to personal service companies”.

Meanwhile, the House of Lords Committee into the role of personal service companies has heard from various parties, making the key points that tax is not the main or sole reason that the majority of contractors choose to work through them and also that it is impossible to separate the definition of a “normal” limited company, from that of a PSC, with one shareholder or director – after all, when is a company with one director a small business and when is it a PSC? Why should a small business selling services be treated any differently to one selling products or goods?

The debate goes on…

Posted by John Hoskin