How to destroy the PSC contracting industry by making the client put everyone on payroll

Cor – Luvva Duck Personal Service Companies (PSC) have been in the news again

The Government is keen to fill the hole in public finance and the latest idea is that the CLIENT should be forced to put a contractor invoicing through a PSC on the client’s payroll if the assignment lasts more than one month.

Will Virtual Assistants who work for three companies be viewed as working for each for more than one month? The early reports are less than clear.

Many small businesses are run as limited companies – for all sorts of legitimate reasons. If theone person limited company is no longer going to be viable this is going to create massive problems for:

  • Mumpreneurs who are working to fit their business in round family commitments
  • Disabled entrepreneurs who are working to create an income
  • Older workers topping up inadequate pensions

Most new businesses start with just one person. Getting a start-up to support more than one person is often impossible (unless you raised a lot of cash to get going). Having a limited company is necessary and adviseable for all sorts of businesses.

We are not all superstars in the media earning large amounts of money.

Do we want similar unemployment rates to Spain or France?

We all know that countries such as France and Spain impose high compliance and regulation on start-up companies. Is there a correlation between their high unemployment rates, their regulation of small businesses and their black economy?   The lack of PSC type structures forces individuals into employment or the black economy in order to be able to cope with the inevitable ups and downs of starting a new business.

Do we want those PSC services to be done outside the UK?

There is a steady trend in the UK towards outsourcing to non-UK service companies. The technology is there and the lower cost base is tempting. We run regular webinars for organisations thinking of doing this. Surely it is not a good idea to tip the balance of convenience and cost so far in favour of outsourcing overseas? Does the government not realise that if the work is invoiced by an overseas service provider then the tax will not be paid in the UK but where the service provider is located?

The government really doesn’t get small business – or the massive impact the internet is having on global trade. They seem to imagine that if they insist contractors go on PAYE then they will. The reality is the contractor is not likely to be on PAYE – and many thousands of contractors will suddenly find they can’t compete with outsourcing operations overseas.

If you are a plumber or an electrical contractor then your work can’t be outsourced overseas (at least not now) but if you are in the service sector then you will find it almost impossible to compete. The government’s inability to grasp the potential impact of this on the service sector start-up is staggering.

If you want to express your views to your MP before the autumn statement you can do it online here

If you want our next outsourcing webinar the dates will shortly be posted here

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