Personal service companies
Written by Charlie Palmer on 10/08/2018


The rules for individuals providing services to the public sector via an intermediary such as a personal service company (PSC) changed from April 2017. The new rules shift the responsibility for deciding whether the IR35 intermediaries’ legislation applies from the intermediary itself to the public sector receiving the service. The public sector will also be ultimately held responsible for paying taxes and penalties where an error has occurred.


How does this impact IFAs? This means that the NHS trust will decide on the surgeon’s NI contributions, not his accountant, nor you. Seasoned followers of the IR35 course will have noticed that the HMRC has avoided really putting the boot in, allegedly because of the high cost to the public sector, where so many employees – such as star presenters in the BBC - use these devices to avoid NI.


The new provisions apply when a member of staff personally performs services in the public sector. The person must be providing the services via a PSC and the services would normally be regarded for Income Tax purposes as an employee / employer relationship.  HMRC has published guidance to help public authorities, staff and third parties affected to see if their contracts are within the scope of the changes. 


Some scenarios fall outside the scope of the reforms. For example the rules do not apply where a public authority has fully contracted out services to a service provider (temping agency) and the workers do not personally provide their services to the client.  These changes are having an enormous impact on the way agency services are provided across the public sector especially in the NHS, local councils, education and the police.



For a selection of useful documents please see our regularly updated Document Library - Document Library

All news