Posted On 28 Nov 2023
If you are a Ltd company and work via a recruitment agency and / or health care provider and the third part client is a public sector organisation then you must read this and be aware that big changes are afoot.
HMRC made it abundantly clear in recent months that they would tackle the use of Personal Service Companies within the public sector.
The following changes will come in to effect from April 2017:
Recruitment agencies will have to assess the IR35 status of all contractors working in the public sector who are paid via their own limited company (as it stands with OH Staffing all PSC’s are within IR 35 and it is unlikely this will change).
If the agency determines that they are Inside IR35, the agency must deduct full PAYE and NIC before paying the PSC – Read that line again and absorb it… Basically if you work on a recruitment agency contract as a Ltd company then by default you are likely to be inside IR35 and because of this the recruitment agency WILL BE RSPONSIBLE TO DEDUCT YOUR PAYE and NIC BEFORE PAYING YOU.
Should the occupational health agencies wrongly assess someone and pay them without deductions, the tax debt will be payable by the agency rather than the limited company.
The result of these changes means:
From a contractor perspective there will be virtually no benefit to working through a PSC if they are inside IR35 and contracting in the public sector.
From an agency perspective this will result in more administration, greater risk and potentially higher costs as a result of the levy.
Watch this space for more information and how it will work logistically.
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