The term Personal Service Company (PSC) was introduced in 1999 when it was used by Chancellor Gordon Brown. Although there is no clear definition of the term PSC it is usually the name used to refer to the limited company, who’s Director is the main fee earner and owns most, if not all, of the shares.
The key concern for most working individuals is ensuring they have a regular income stream. This concern is even more prevalent in the self employed and those working via their own Personal Service Company.
A PSC will need to seek out services to ensure an income and this is mainly done via an agency. Historically, agencies often contracted with PSCs as this was considered less of a risk and did not carry the annoyance of an employment relationship; this was not meant as a negative, it simply means the agency would not have to deal with issues such as holiday and sick pay. We believe this attitude will soon change when the IR35 reform is introduced in April 2020.
As most contractors are aware, IR35 will change when the reform is introduced on 6th April 2020, whereby the responsibility of determining IR35 status will rest with the client. Although this change should not make contractors complacent with regards to IR35; compliance should be at the forefront of their minds, right from the point of seeking work.
Some factors PSCs should consider when searching for a contract are:
It is our opinion that, from April 2020, all roles should be advertised as falling inside or outside of IR35. This will assist contractors in searching for the best contract; and whilst under the new rules the liability will fall to the fee payer, ensuring compliance yourself will demonstrate good business practices.
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