The government’s proposed legislation to ensure that ‘controlling persons’ working for an organisation have PAYE income tax and NICs deducted at source will not change anything in practice, according to one expert.
The government’s proposed legislation to ensure that ‘controlling persons’ working for an organisation have PAYE income tax and NICs deducted at source will not change anything in practice, according to one expert.
Philip Fisher, Head of Employment Tax and Rewards at PKF, said: ‘The legislation currently states that all “office holders” of an organisation must be taxed under PAYE. The overwhelming majority of the newly defined controlling persons will already be office holders so should already be on the payroll.
‘HMRC states in [its Consultation into the Taxation of Controlling Persons] that the new rules will have a “negligible impact on a small number of individuals” and even that may be overstating the case. We’ve been waiting over a year for this consultation, so it is disappointing that yet again the government has failed to address the serious issue of personal service companies.’
Fisher said the only ‘real solution’ would be to ‘unify the tax treatment of the employed, self-employed and those who operate through their own companies’.
‘Surplus to requirements’
KPMG suggested that the consultation seemed ‘surplus to requirements’. Jayne Vaughan, the firm’s Head of Employment Tax in the UK, said: ‘The essential problem that the authorities are trying to fix is that of government departments engaging senior “controlling persons” via [PSCs]. They are attempting to address this by changing the rules for ALL employers – not just government departments.
‘The knock-on effect of this for many private sector employers is that it could become more complicated, more expensive and more difficult for them to obtain the services of the people they need when they need them. At a time of economic difficulties with the focus very much on growth, making it easier and more flexible to hire people seems to make sense.
'In a number of sectors there are likely to be a number of individuals who are routinely engaged via PSCs and could be caught by the definition of “controlling person”, suggested to include for example having managerial control, controlling budgets and/or the workforce etc. A simpler and easier approach would be to simply introduce a policy under which government departments were not allowed to use these PSCs if that is the objective being sought.’
The government’s proposed legislation to ensure that ‘controlling persons’ working for an organisation have PAYE income tax and NICs deducted at source will not change anything in practice, according to one expert.
The government’s proposed legislation to ensure that ‘controlling persons’ working for an organisation have PAYE income tax and NICs deducted at source will not change anything in practice, according to one expert.
Philip Fisher, Head of Employment Tax and Rewards at PKF, said: ‘The legislation currently states that all “office holders” of an organisation must be taxed under PAYE. The overwhelming majority of the newly defined controlling persons will already be office holders so should already be on the payroll.
‘HMRC states in [its Consultation into the Taxation of Controlling Persons] that the new rules will have a “negligible impact on a small number of individuals” and even that may be overstating the case. We’ve been waiting over a year for this consultation, so it is disappointing that yet again the government has failed to address the serious issue of personal service companies.’
Fisher said the only ‘real solution’ would be to ‘unify the tax treatment of the employed, self-employed and those who operate through their own companies’.
‘Surplus to requirements’
KPMG suggested that the consultation seemed ‘surplus to requirements’. Jayne Vaughan, the firm’s Head of Employment Tax in the UK, said: ‘The essential problem that the authorities are trying to fix is that of government departments engaging senior “controlling persons” via [PSCs]. They are attempting to address this by changing the rules for ALL employers – not just government departments.
‘The knock-on effect of this for many private sector employers is that it could become more complicated, more expensive and more difficult for them to obtain the services of the people they need when they need them. At a time of economic difficulties with the focus very much on growth, making it easier and more flexible to hire people seems to make sense.
'In a number of sectors there are likely to be a number of individuals who are routinely engaged via PSCs and could be caught by the definition of “controlling person”, suggested to include for example having managerial control, controlling budgets and/or the workforce etc. A simpler and easier approach would be to simply introduce a policy under which government departments were not allowed to use these PSCs if that is the objective being sought.’
