The Income Tax Division, on behalf of the Treasury, has today published a consultation document addressing personal service companies which includes a draft of the legislative amendment proposed by the Treasury Minister in his February Budget. The purpose of this consultation is to outline the proposed amendment and to seek views and comments on the proposal.
A personal service company (PSC) is one through which services are rendered to its customers by a member/shareholder of the company or by a relative of such a person. The company will typically have few if any employees other than the sole director who owns most or all of the shares and who delivers the services.
The use of a PSC may result in income tax deferral and it may also be used to reduce National Insurance contributions.
The Treasury Minister said, in his Budget speech earlier this year: “........ I intend to introduce a legislative change which will make it clearer when income is to be treated as deriving from employment”.
Anyone wishing to submit their views on the consultation is invited to do so by Friday 14 September 2012.
The Consultation Document can be viewed here