A somewhat ambiguous statement in the Chancellor’s Budget yesterday concerning IR35 may leave contractors who have opted to work through umbrella companies breathing a sigh of relief that they didn’t take the personal service companies route. A number of industry experts are already sounding urgent notes of circumspection about the statement.

It came as no surprise to find that IR35 rules will remain in place, but that measures are underway to improve their administration by HMRC; this much we already knew. In a measure which appears to be bowing to the media frenzy over high-ranking civil servants who work through their own limited companies, the Budget stated that the Government intends to consult on the prospect of “requiring office holders/controlling persons who are integral to the running of an organisation to have PAYE and NICs deducted at source by the organisation by which they are engaged.”

The PCG has been quick off the mark to respond to this, stating that it is “deeply concerned about the ramifications of this proposal on the interim sector and we will seek urgent clarification on what exactly this will mean for freelancers.”

PCG Managing Director John Brazier said he found the plans “ambiguous” and expressed concern that they would adversely affect senior interims. He warned that it is “crucial that these legitimate businesses do not suffer as a consequence.”

His views were shared by other industry experts, including the Chairman of the FCSA, Stuart Davies, who frankly stated his thought that the Government was attempting to “prevent senior civil servants from legitimately working as freelancers and contractors as recently highlighted in the media.”

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