Off Payroll Personal Service Companies (PSC) via Public Bodies

We know that PSC’s are a hot topic for HMRC, as they are often regarded as an avoidance of paying Employers National Insurance (NI) and a tax efficient vehicle for the end contractor performing the work.

There is now new guidance on the deduction of Tax & National Insurance, plus the payment of employers NI.

From April 2017, where a worker would be deemed to be an employee of the public body, absent the PSC or other intermediary, then payments to the PSC and other intermediaries that supply the services of the worker to a public authority or agent acting on behalf of a public sector organisation are removed from IR35.

Under the new rules, the public body must consider the nature of the work performed and whether employment status applies. After notification to the worker, the fee payer is then responsible for deducting tax and national insurance from the payment to the PSC and in addition paying employers NI.

The view is that this is likely to extend beyond public bodies, so we recommend checking the status of non-employees / off-payroll to consider workers and self-employed, especially those trading via a PSC.

For further information please click here or call us for more expert guidance.