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Freelancer Limited Company plan back on IPSE’s agenda

The Association for Independent Professionals and the Self Employed are inviting their members to share their thoughts on the possibility of Freelancer Limited Companies, an idea designed to provide an alternative to the confusing issues surrounding IR35. The idea of Freelancer Limited Companies was suggested to a Labour Small Business group last year, as a […]

By Laura Nixon on 27 Aug 2015
Read time: 2 minutes

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The Association for Independent Professionals and the Self Employed are inviting their members to share their thoughts on the possibility of Freelancer Limited Companies, an idea designed to provide an alternative to the confusing issues surrounding IR35. The idea of Freelancer Limited Companies was suggested to a Labour Small Business group last year, as a proposal designed to make life easier for those who are concerned about the lack of clarity over employment status surrounding the existing legislation.

The concept of FLCs was suggested to the Chancellor, George Osborne, before his Autumn Statement in 2014, as an idea that could provide a solution to the problems that the government are trying to solve by simplifying IR35. In the past, IPSE have expressed their concern that neither Labour’s Small Business group, nor the coalition or current government have actually taken the idea seriously, despite recommending that they consult on the matter in order to ascertain its potential workability.

However, this year has seen IPSE taking advice from accountancy experts in an attempt to make the concept more practical and to provide a reworking of both the concept and the model for the FLC to provide a little more momentum for the project. The Summer Budget, released by the Chancellor in July, indicated his desire to reform the tax system when it comes to Personal Service Companies, but many have interpreted his measures as being ‘anti PSC’ and consider his plans to be an attack on contractors.

Chris Sanger, Global Head of tax Policy at Ernst and Young, has written to IPSE to express his support for the further development of the idea of FLCs, calling them a ‘safe harbour’. He believes that they constitute a sensible policy approach in the current climate, providing a potential solution which is likely to be welcome in the current climate of uncertainty.

Mr Sanger believes that the current contracting environment borders on the hostile in the months since IPSE first conceived the FLC, making it even more important that some sort of solution is reached, preferably with significant input from those who represent the flexible workforce. IPSE have long been told that they need to provide alternative solutions instead of just criticising the current system. For this reason, they believe that the rejuvenated proposals on how FLCs would work could be best informed by their members and are asking them to put forward their thoughts on the matter to come up with the most practical and feasible proposal.

Contractors who are concerned about their future in light of the potential changes to the legislation which affects them should consider using specialist contractor accountants in order to ensure that they are compliant with all the relevant rules. Our team have many years’ experience dealing with the intricacies of contracting and can help with everything from starting out on your own to planning your retirement, so call today on 01253 362062 or email us at contractoradvice@nixonwilliams.com.

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