The PCG have called on the government, civil servants and the media to avoid introducing panic to the debate surrounding the role of limited companies in the UK economy.
They are worried that the recent claims that some senior Government workers are being paid through limited companies in order to reduce their tax and NI bills may affect contractors and freelancers that work through their own limited company. The freelancer community have done a lot to legitimise their means of operating in the past decade and this should not be undone.
Chris Bryce, Chairman of the PCG, said:
“The Government is right to look closely at how public servants are being remunerated and where there is disguised employment or tax evasion it should be stopped and fully investigated by HMRC. However, it is fundamentally inaccurate to brand all one-person limited companies as employees attempting to avoid tax. The Prime Minister himself has praised freelance workers and said they make a valuable contribution to the nation’s economy.
“We must ensure we do not create an orchestrated witch-hunt against the nation’s smallest businesses that will damage public and private sector growth in the UK.
“One-person businesses are a legitimate model and the labour market flexibility they provide is vital to the economic recovery of this country. Unemployment is higher than it has been for 16 years, whereas freelancing has grown by 13 per cent in the last three years. We should ensure those rushing to attack limited companies don’t trample the only green shoots of recovery we have seen for quite a time – freelancers.”
Shout99 asked HMRC to comment on the case of the chief executive of the Student Loans Company for which they declined. They instead gave them this response;
“IR35 remains in place and is used to ensure that people cannot gain a tax or NICs advantage by operating through an intermediary. Following last year’s Budget announcement HMRC has been working to simplify the administration of IR35. This includes targeting HMRC’s compliance effort at those who are in disguised employment and making it easier for people operating through personal service companies to understand when IR35 applies.”
