Also announced in the Autumn statement are changes in relation to Ltd Company PSC’s (Personal Service Company) who operate within the public sector. These changes mean that the client of the Ltd Company will be responsible for checking the IR35 status of the company, even in situations where an agency may be present in the contractual chain. HMRC are providing an online tool to assist in this regard. In our opinion this is a dangerous precedent to rely on an online tool to give a decision on something as critical as IR35 status that ordinarily relies on an interpretation of decades of case law.
Contractors found to be within IR35 will be subject to PAYE deductions of income tax and national insurance on their deemed payment and the client will be responsible for paying the relevant amount of employers national insurance due. The net amount is then remitted to the Ltd Company. While the Ltd Company is subject to employment taxes this does not confirm any employment rights.
The general consensus of opinion is that this will mean that the public sector will lose the flexibility of contractual workers and that already squeezed public services will faced increased costs.