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Economic interdependence

Associated companies - economic interdependence between spouses running difference companies

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I recently got  a new client who's running a recruitment agency in health and social care (Company A). My client is the sole shareholder and director. The spouse has a PSC and is securing agency work  (shifts) with company A.  The hourly payments are at arm's length.

Would this kind of an arrangement be perceived to be that of an 'economic interdependence?'

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By Matrix
02nd Aug 2020 14:28

What is the purpose of the arrangement? Does the PSC have other clients?

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By ThomasNicolus
02nd Aug 2020 14:45

At the moment the PSC is only getting work from the recruitment agency owned by the spouse. There are other agency employees. The recruitment agency sends workers to different clients and pays them on an hourly basis

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Replying to ThomasNicolus:
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By Matrix
02nd Aug 2020 15:38

OK so what is the background to your question? Claiming the employment allowance or the intermediary rules or IR35 or other?

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By ThomasNicolus
02nd Aug 2020 16:29

Thank you @Matrix, my client is currently outside the IR35 and not a concern for now. My questions would be:
1. Would there be an economic interdependence?
2. What about intermediary rules?

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Replying to ThomasNicolus:
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By Matrix
02nd Aug 2020 19:06

1. I expect it would depend on a number of factors and which rules you are looking at. You did not advise whether your question is in relation to the employment allowance.
2. I thought these rules apply to payments to individuals, it is IR35 which the wife would need to consider for services provided by her company to Company A.

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Replying to Matrix:
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By ThomasNicolus
02nd Aug 2020 19:14

However, IR35 has been pushed to April 2021 for the private sector.

My concern is whether Company A and the spouse's PSC could be perceived to be economically interdependence

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Replying to ThomasNicolus:
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By Matrix
02nd Aug 2020 19:22

No that is the off payroll rules which probably wouldn’t apply to Company A if it is small. So the wife has to make the IR35 assessment and the PSC bears the risk under the existing rules.

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By Tax Dragon
02nd Aug 2020 20:46

Agreeing with Matrix, IR35 has been in effect for over 20 years and quarterly reporting for employment agencies has been in for over 5.

The answer to your question possibly depends on its context, so.... I agree with Matrix about that too.

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