PSC proposals coming on Wednesday
Reports from contractor groups ahead of Wednesday’s pre-Autumn Statement policy suggest that George Osborne is serious about introducing a new regime to police the use of personal service companies.
Following up reports in The Guardian and Daily Mail last week, Contractoruk.com got confirmation from two sources in the IR35 community that the leaks were more than government kite flying. The Chancellor is going to announce concrete proposals on Wednesday that will come into force from April 2016, the site predicted.
If Contractoruk.com’s sources are right, personal services companies will be able to avoid being put through company PAYE schemes if they satisfy the criteria in an online test based around the supervision, direction and control (SDC) criteria put forward as part of the controversial restrictions on claiming travel and subsistence expenses.
Along with most of the contracting community AccountingWEB members were generally dismayed at the suggestions circulated to the national papers, which tended to focus on the alleged abuses of high profile BBC presenters and quoted estimates that the new proposals would recoup up to £400m for the Exchequer.
The mechanics of and responsibility for the employment status test were not put into the public domain, but the government also faces a long and protracted battle of attrition in the courts unless it is going to legislate a new definition of employment status based on the simplified SDC criteria rather than the seven factors that tribunals currently use when considering whether someone is an employee or not.
When confronted by the complexity of sorting out that legal tangle, perhaps the Chancellor will go back to the drawing board and consider a much simpler approach to levelling the playing field. As AccountingWEB member dmmarler put it, “We would still be better off if we did simplify everything - combine income tax with NI and then all this additional IR35 legislation would be totally unnecessary. All the different rules for NI would go out of the window.”
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