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Lords call for evidence on personal service companies

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The House of Lords Select Committee, formed on 12 November 2013, is seeking evidence by 31 December 2013 from interested parties on the use of personal service companies and the implications for tax, NIC and wider issues for workers and their clients. Questions include: what is the effectiveness and efficiency of the intermediaries legislation (IR35) in facilitating tax collection; should the current intermediaries legislation be reformed; to what extent does the current IR35 legislation impose additional compliance burdens and administrative costs; and do businesses insist on the use of PSCs and, if so, should responsibilty be placed on them rather than the worker to decide whether a business transaction falls within IR35.

On 25 November, the committee heard evidence from Rowena Fletcher and Robin Wythes (HMRC’s employment status team), and John Whiting (Office of Tax Simplification). Whiting observed that: ‘As with so much of tax legislation, it needs to be run with as light a touch and as little administrative effort as possible, and that is perhaps where IR35 has gone slightly wrong. I could say that you should go right back to the original design of the legislation, which set off down the route of potentially policing contract by contract, which is innately clumsy.’

The committee aims to finalise its report to the House in March 2014.