IR35 AND THE PSC
What is a Personal Services Company?
Whenever IR35 or the off-payroll rules are mentioned people refer to a Personal Services Company. What is a PSC?
To confuse matters there is no legal definition of a Personal Services Company, the PSC is also known as an intermediary and the abbreviation PSC is the same as Companies House uses for a Person of Significant Control! The 2 PSCs are not the same thing.
The simplest structure for the off-payroll rules to be considered has a top client company that contracts with the PSC. The PSC employs the contractor, who is also the shareholder and director of the company.
The PSC could employ other people (spouse, family members etc) who may or may not be directors and shareholders.
There is no contract between the Top Client and the Contractor.
Sometimes there is an agency that sits between the Top Client and the PSC and sometimes there is more than one agency in the chain.
To see if the off-payroll rules apply it is assumed that the PSC does not exist and a hypothetical contract is assumed to exist between the Top Client and the Contractor. This is a test for employment. Therefore is the hypothetical contract one for services, ie self employment, or for service, ie employment?
Read more about Off Payroll tax rules and IR35.
