If the clients and agencies you work with only deal with limited companies, you might have no choice but to set up a personal service company. Or you might choose to set up a personal service company to be more tax-efficient and have a higher take-home pay. In any case, if you have, the most important thing you need to consider is whether the relationship with your clients falls ‘inside’ or ‘outside’ dietforasmallplanet.com the IR35 rules. Many contractors choose to work for clients using their own limited companies, sometimes referred to by the taxman as ‘personal service companies’. They do so for many reasons, often because clients and recruitment agencies won’t hire the self-employed who operate as sole traders, which leaves contractors who are not affected by the IR35 tax legislation with few choices.
But it’s important to remember that it’s not the end of the world if an assignment does fall under IR35. It simply means you’ll have to reassess your tax requirements on that particular contract. The important factor when it comes to distinguishing a PSC from a Managed Services Company is that the individuals or group in the PSC own and organise it, too. Sign up today for our mailing list for the latest industry news and updates. I have always wanted to do something great with my life, proving to myself and my family that I could be different from my other brothers and sisters. I have always worked hard in College life reaching grades which I thought I was not capable of gaining.
How could opening a PSC benefit you and what are the tax implications of doing so?
To this end, HMRC wants to see that contractors are ‘genuinely’ self-employed – for example, they’re taking on all the risks of running a business, and are providing services on a project-by-project basis . To add an extra layer of protection and flexibility, the hiring organisation may use an agency. Agencies are like a one-stop shop for a business looking for contractors with specific skills to work on an as-needed or project-by-project basis. As the leading law firm in one of Britain’s major holiday resorts, we have extensive experience in the leisure and tourism industry.
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- When this happens, the limited company is known as a ‘personal service company’.
And so the term personal service company began to be used by HMRC to describe businesses they considered as tax evaders and potentially the subject of tax investigations. By using a limited liability company, contractors are also insulated to a certain extent sougolink-beef.net from business risk. When contractors work for the sort of blue chip clients who might sue suppliers to cover themselves if things go wrong, this is a significant benefit. If you work in the construction industry, our CIS services are sure to help you.
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If you would also like to receive future news about our products, services and offers please check this box. The term ‘Personal Service Company’ was derived from an HMRC regulation called ‘IR35’ introduced back in the year 2000. The essence of IR35 is to ensure that anyone who is, in effect, working as an employee despite what their contract may say, and albeit through a PSC, is taxed as an employee. Becoming a PSC director brings with it additional responsibilities concerning the conduct of the company’s business and its obligations to file certain statutory returns.
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