Following hot on the heels of the recent changes to the Intermediaries Legislation HMRC have introduced further changes from April 2017 which will affect companies who provide their services to the public sector.
The public sector is recognised as being
Government departments, legislative bodies, armed forces
Publically owned companies such as Transport for London
The new rules will require public sector engagers or the third parties who engage the workers through public service companies to determine whether the intermediaries legislation applies and deduct tax and national insurance from any payments that are made. The decision as to who decides if the legislation applies is dependent on who is the closest engager to the service company.
They are then responsible for deducting income tax and national insurance before any payment is made to the service company.