Lords want your input on personal service companies

Contractors are being asked their views on personal service companies by a Lords inquiry due to make recommendations about their future use in the public and private sectors.

Calling for evidence yesterday, the Personal Service Companies Committee said it sought opinions from “anyone with an interest” in PSCs, no later than Tuesday December 31st 2013.

The committee, to be chaired by Baroness Noakes, will consider the implications of PSCs for tax, NI and “wider issues”, such as IR35, from the view of both workers and clients alike.

The Baroness said: "In these economically difficult times, it is important that the government receives the tax it should rightfully be receiving, from all those who should be paying it. Equally, we need to ensure that our tax system does not place unreasonable burdens on taxpayers. Of course, this is a complicated topic.

"This is why I would encourage anyone who has an interest or experience in this area to send us their evidence and contribute to the debate."

People wishing to contribute can submit written evidence on “any aspect” of PSCs, tax and NI, but the committee has published 11 questions relating to PSCs to help concentrate responses.

The bulk of the questions concern IR35 –  its effectiveness; costs to PSCs, scope for reform, need to be better explained and whether administrative improvements in May have worked.

More controversially, the committee also asks that if end-users insist on PSCs, whether such clients should be made responsible for deciding whether IR35 applies to their engagements.

Aside from tax, the other questions include, ‘What are the wider benefits and drawbacks for the individual using a PSC?’ and, ‘To what extent are PSCs still used in the public sector?’

Payroll firms will come under scrutiny too, in that the committee wants to know what role umbrella companies play, and to what extent recruiters encourage people into such structures.

How to respond to the questions, or comment in general, has been spelt out by the committee, which will be holding oral evidence sessions of persons it requests between now and January.

Meanwhile, despite one Lord citing a “very short period” to examine a “very complex subject,” the PSC committee reiterated its aim of making recommendations by March 2014.

Editor's Note: Further reporting on the PSC Committee -

Taxman's IR35 officials 'monitoring dividend levels'

'Many PSCs have no idea about unpoliceable IR35'

IR35 investigations surge to seven-year high


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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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