It is not uncommon for businesses to engage individuals to work on an off-payroll consultancy basis. Typically this may be by engaging the individual as a sole trader, through an employment intermediary, or via an individual’s own company (a so called personal service company or “PSC”).

The engaging business must consider the “employment status” of off-payroll workers to assess whether there is any risk that HMRC could consider them more akin to employees such that they should be paid under deduction of PAYE. Any re-categorisation of such workers from self-employed to employed will result in a PAYE cost for the engaging business. This can be expensive where individuals have been engaged off payroll in numbers and across tax years. Typically the PAYE tax sought will be for a four year retrospective period.

Our support is in helping businesses to consider the most appropriate engagement mechanism and to ensure the appropriate tax and national insurance treatment. We also help businesses to structure the basis on which they do engage genuinely self employed individuals taking into account the varied and complex considerations which need to be borne in mind when considering employment status. .

Whilst the proposed changes to tax legislation planned from April 2020 for personal service companies has been pushed out a year and is not now intended to be operative until April 2021 it is imperative that end users of individuals engaged through PSCs do review this part of the workforce population ahead of the expected change. 

If you would like to discuss further how we can help with any of the above, please contact a member of our team.