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In the 2012 budget there was mention of new provisions relating to “controlling persons” working through PSCs – this has been a political issue recently, re the public sector, and created a bit of noise around people possibly not paying “fair” tax.

HMRC have a consultation out today:
http://customs.hmrc.gov.uk/channelsPortalWebApp/downloadFile?contentID=HMCE_PROD1_032074

In a nutshell its proposing that:

~ controlling persons are defined as “someone who is able to shape the direction of the organisation having authority or responsibility for directing or controlling the major activities of the engaging organisation during the year. This would be someone who has managerial control over a significant proportion of the organisation’s employees and/or control over a significant proportion of the budget of the organisation”

~ that new legislation for such people will require that the engager stops tax and NI under PAYE as if the person was employed directly.

~ that this overrides IR35

~ Micro businesses are to be excluded from having to apply the rules (EU definition, less than 10 employees and balance sheet or turnover less than Eur2m)

Doubtless there will be some press coment about this, and speculation, but our initial assessment is its unlikely to impact on many of our clients.