Contractors working through umbrella companies may not have been the prime targets for media hostility recently following disclosures of remuneration arrangements involving personal services companies amongst senior civil servants, but with a budget looming the Chancellor’s responses to the issues of self-employment in general and IR35 in particular are at the forefront of many experts’ concerns.

Kate Cottrell, an employment status expert, told the industry news source ContractorUK:

“From an IR35 perspective it is usual to ‘announce’ nothing much. But this year there may be something in the [Budget’s supporting] documents about addressing the recent personal service company issue in the public sector.”

Mr Osborne is duty bound to at least consider advice from the OTS which, in addition to recommending the simplification of the UK’s labyrinthine tax regime, wants the Chancellor to be clear that “personal service companies are legitimate business vehicles.” Knee-jerk populism in response to a media frenzy just won’t cut the mustard.

One senior expert in the field of IT contracting said: “I am not expecting anything too momentous to come out of this Budget. It has to focus on growth; I just hope it recognises that us small, flexible one-man-bands are actually the engine for that growth.”

On a cautionary note, a spokesperson for the FCSA added: “We do expect an increase in HMRC activity around employment status in the new tax year and we would recommend to all self-employed professionals that they should engage with their professional advisors to ensure they can clearly demonstrate their self-employed status if challenged.”

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