On Friday HMRC released the discussion document inviting contributions from the industry on how best to police the murky area of disguised employment.

At first glance the consultation seems conflicted proposing two equally unsatisfactory options and then asks for someone else to come up with the magic solution for this thorny issue.

Perhaps the most concerning element of the document can be found on page 8 where it is suggested that the engaging party rather than the PSC be held responsible for the deduction of TAX and NI exactly as they would for a normal employee. Based on how open to interpretation the current legislation is and how few successful cases HMRC bring against contractors it is surely unfair to expect the engager in these circumstances to make that decision and then enforce it onto a supplier that they want to keep on side.

Nestled within the final paragraph on that page is the suggestion that applying the same mooted rules for allowing tax relief on travel and subsistence expenses be applied to PSC contractors. Such an idea relies heavily again on interpretation and refers to another consultation for which there is, as yet, no definite outcome.

Overall the document feels somewhat incomplete and as if it has been pushed out into the public domain as a matter of urgency because HMRC know their own solutions won’t gain any traction so they need the commercial sector to bring some realistic balance to the proposed solutions. This is by no means a bad thing but the lack of a workable option at this stage indicates there is still a lot of work to be done.

We will continue to lobby on behalf of all of our contractors and we have already engaged with correspondence with our local MP, a certain Mr George Osborne, on the matter. We will continue to fight strongly for a flexible workforce that is not penalised for taking risks and branching out on their own.