Yesterday I attended an excellent debate hosted by Wedlake Bell and ISE Partners featuring Blair Adams and Adam Grant, partners in Wedlake’s employment division, Samantha Hurley, Operations Director at APSCo and Adam Kay, tax partner with Saffrey Champness. The main concerns of the panel revolved around differentiating workers vs self-employed, employee vs worker issues and contracting with intermediaries, such as personal service companies (PSCs).
While it would be desirable to have clear legislation to enable companies ensure the people they engage are employees, workers or self-employed, until that happens, we must rely on conclusions drawn from old law and a wealth of cases. Unfortunately, experts seldom agree on the precise status of a worker based on any given set of circumstances.
It is very likely that from 2020/2021 the private sector will come into line with the public sector, meaning that the engagement party will need to determine the status of the engaged staff and must withhold NICs and PAYE from payments made to individuals unless they are satisfied that the people are genuinely self-employed. Under the current IR35 law, to which no one is anticipating a radical change, the only way to prevent that is to work with an intermediary in that chain whereby it becomes the intermediary’s responsibility to make that decision and to be financially responsible for it.
It is doubtful that recruitment businesses will elect en masse to employ contractors directly and they will prefer to work with umbrella companies as they do now.
I see no likelihood of an imminent decline in PSC and umbrella providers in the UK as a result of these changes. There will be further pressure on those operating at or beyond the limit of what is lawful to clean up their act or to withdraw from the market.
If you would like to learn more about changes to IR35 or Access Financial’s PSC service for contractors in the UK, please get in touch with one of our consultants.