The brief for the Committee, chaired by Baroness Noakes, is “to consider the consequences of the use of Personal Service Companies for tax collection”. The Committee will be gathering evidence on a number of issues including the use of Personal Service Companies, the effectiveness of the current IR35 regime and the role of umbrella companies.
In its review, the Committee intends to consider the use of PSCs, a term which has developed to describe freelancers' business models, but has no real legal standing, and the implications for tax, National Insurance and wider issues both from the point of view of workers and their clients.
The Committee has asked for evidence on any aspect of this topic, particularly on the following questions:
1. To what extent are Personal Service Companies being used for the provision of personal services to UK businesses?
2. What is your view of the effectiveness and efficiency of the intermediaries legislation, first introduced in 2000, in facilitating tax collection?
3. Should the current intermediaries legislation be reformed and if so, what would be the alternatives?
4. To what extent does the current IR35 legislation impose additional compliance burdens and administrative costs?
5. Are the current avenues of consultation on IR35 working and what more should be done to ensure that the Government listens to interested stakeholders?
6. Are HMRC’s recent efforts in improving the administration of IR35 judgement cases working? Is more guidance and advice needed to aid individuals in judging the status of business transactions for themselves or should further resources be given to HMRC for compliance efforts?
7. Do businesses insist on the use of Personal Service Companies? If so, should responsibility be placed on them rather than the worker to decide whether a business transaction falls within IR35?
8. Are individuals forced into the use of a Personal Service Company as a prerequisite for being considered for work? If so, what can be done to ensure that the use of a Personal Service Company is appropriate for the individual? 2
9. To what extent are Personal Service Companies still used in the Public Sector? Should those engaged in public bodies and similar organisations be prevented from working through a Personal Service Company? If so, would the Public Sector experience difficulties in obtaining the skills and expertise that are needed?
10. What role do Umbrella companies play? To what extent are agencies encouraging individuals to enter into such structures?
11. Aside from the issues of Tax and National Insurance, what are the wider benefits and drawbacks for the individual of using a Personal Service Company?
It has already started taking verbal evidence and will continue until January 2014. Written evidence can be submitted up to the end of this year.
The Committee is expected to report on its findings around March 2014.
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Susie Hughes © Shout99 2013