Government limited company proposals - an extraordinary over-reaction?
Posted May 23, 2012
Industry groups have criticised the Government's announcements on public sector 'off payroll' remuneration, and the consultation into the tax treatment of controlling persons.
The Treasury firstly announced a clampdown on the use of 'off payroll' payments to highly paid workers after it was found that over 2,400 individuals are currently being remunerated via their own personal service companies.
A consultation has also been launched into the use of personal service companies by 'controlling persons' (i.e. influential people in an organisation), where HMRC believes that such individuals should have income tax and NICs deducted at source by that organisation.
PCG warns over starting a 'witch hunt'
John Brazier, MD of PCG, has once again warned against a 'witch hunt' against freelancers in the public sector, and points out that many hard-working freelancers are likely to be affected by the Government's proposals.
Brazier said that there is a danger that new legislation may be introduced which "fails to differentiate between those who abuse the tax legislation and the vast majority who operate legitimately."
Disastrous move for the private sector
Jason Atkinson, chair of the Interim Management Association (IMA), whose members are likely to be disproportionately affected by the 'off payroll' changes, said that the Government is "likely to lose an extremely valuable talent pool of highly skilled senior interim managers, who can be quickly deployed on short-term contracts to deliver specific results immediately and effectively..."
On the 'controlling persons' consultation, Atkinson said that the proposals could "prove disastrous for the private sector."
An extraordinary over-reaction
Stuart Davis, Chairman of the Freelance and Contractor Services Association (FCSA) was equally scathing of the Government's proposal, and said that it "smacks of an extraordinary over-reaction to a barely recognisable problem"
"IR35 exists to ensure that tax avoidance is not taking place and it is a gross insult to freelancers and contractors to suggest that just because they are not full time employees they are somehow abrogating their leadership responsibilities."
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