Although fully supportive of the government’s efforts to crack down on false self-employment through intermediaries, APSCo believes that the draft legislation intended to deal with the problem needs to undergo changes. As it stands at present, it raises several major concerns and APSCo is worried about the effect it would have on the recruitment industry.
Without significant changes, the proposed rules pose the danger of unintended consequences, unquantifiable risk and administrative burden for APSCo members, the professional trade body said in its response to the HMRC consultation. The main concern for APSCo is the fact that the staffing industry is expected to drive compliance without any guarantees that it will be legally protected against rogue practices at other intermediaries.
HMRC should urgently address several points of concern.
According to APSCo, HMRC should urgently address several points of concern. The final legislation should include statutory guidance for recruitment companies on compliance actions, a statutory defence in cases when appropriate compliance checks have been carried out and a definition of personal service company (PSC).
Under European Union law, taxation requires proportionality and this applies to the UK as well. However, APSCo thinks that the current proposal could be legally challenged in that respect. As for PSCs, previous attempts to define them have ended in failure due to lack of success in finding a definition that covers all eventualities. According to APSCo members it would be acceptable to have one that covers 60% of eventualities. This would prove helpful as uncertainty would then cease to hang over all PSCs and at least 60% of them would be cleared, APSCo pointed out in its response.