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In 2000, legislation (IR35) was introduced to tackle the avoidance of employment taxes by those who work through intermediaries, primarily their own company, often known as a Personal Service Company (PSC).
The number of people working through PSCs has continued to grow over recent years. The government estimates that there were around 265,000 PSCs in 2012-13, an increase of 65,000 on the previous year alone.
Following concerns that IR35 is not effective and often not complied with, HMRC has published a number of proposals to improve the current system. The proposals include limiting the scope of which engagements fall within IR35 and, more controversially, shifting the burden of compliance on to those engaging PSCs (in other words the companies that employ the consultants) to ensure that the correct amount of tax is paid.
HMRC is seeking comments on the proposals, or any additional suggestions, by the end of September 2015.