IR35 - personal service companies

If you run your business through a personal service company (PSC), then you should be aware of IR35 legislation which attempts to prevent the avoidance of tax and national insurance contributions.

Broadly speaking, if an individual could have sold their services directly to an end client rather than through a limited company or partnership, then HMRC may deem them as employed as opposed to self-employed.

This is a very complex area of tax law and the obligation to assess employment status will fall upon either the client or the company depending on various factors.

HMRC continues to be alert to the abuse of ‘disguised income’. If they deem a contractor, operating through a PSC, to be within the IR35 rules then the financial consequences can be severe as tax investigators can look back at contracts over many years. In such circumstances, your company may become insolvent with the additional risk of personal liability.

We can help contractors understand the legislation affecting personal service companies and advise on the most appropriate options available.

Contact us to discuss how we can help you.