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For many, this would have been the worst of all worlds, as it was thought that end clients would then disengage from using freelancers.
Every time that changes to IR35 have been discussed there has always been the spectre of end clients taking over responsibility and covert warnings of 'be careful what you wish for'. Particularly after the Government put further responsibility on its own departments for determining contractors' status in the light of the 'off-payroll' rows where senior public sector workers were operating as limited companies to avoid tax and NI costs.
However, the report from the House of Lords and the Government's response seems to have laid this particular ghost to rest - for the time being.
The House of Lords reports acknowledged that "businesses would generally resist being made responsible for IR35 assessment, finding the additional administrative pressure and liability as overly burdensome".
The Government has accepted this and said that it "currently has no plans to make end client businesses responsible for IR35 where such businesses engage a personal service company.
This clarification was welcomed by many representative bodies including the Interim Management Association who said: "Interim managers offer their services as genuine self-employed professionals and we fully support the need to penalise those who deliberately avoid tax and National Insurance through the use of intermediaries. We welcome the government’s decision to not make the end-client responsible for determining the IR35 status of PSCs."
More information
Shout99 has followed this subject closely and reported updates, reactions and analysis. For more information, see our News on IR35 Section. You can also subscribe to free email alerts when new items appear in this section, so you won't miss out on any important development.
The full PSC report from the House of Lords Select Committee can be viewed here: Select Committee on Personal Service Companies - First Report - Personal Service Companies
The Government's response can be read here: House of Lords Select Committee on Personal Service Companies - The Government’s response
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Susie Hughes © Shout99 2014
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