The amount of tax contractors pay through their Personal Service Companies (PSCs) has been on the radar of HM Revenue & Customs (HMRC) for some time. Intermediaries’ legislation and subsequent changes, most recently this April, are requiring contractors to make decisions about whether or not to continue trading through a limited company. In some cases clients are now being forced to move onto payroll without having time to plan an appropriate closure of their limited company, which may cause issues especially if the company still has a significant tax liability.
Bridgewood has been advising contractors and working alongside accountants in this area for some time, and in this article we discuss the implications of IR35 and explore what options contractors have, should their company need to cease trading.
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