Q. Hi, I’m a contractor operating a limited company, as a PSC. A possible opportunity has come up which would require me to hire one or two full time employees. I would also need to continue working as a contractor to ensure I have enough funds. Would I be able to hire employees through my limited company while continuing to work as a contractor? If so, would the company still be regarded as a PSC?
A. By virtue of HMRC’s definition of a service company then your company will still be a PSC, ie:
- You performed services for a client;
- You worked under a contract between the client & a company that you were a shareholder of during the tax year.
However, taking on employees to assist with the work will strengthen your company’s position in terms of IR35, as it stands at present, as the contract will not involve your own personal service & therefore will sit outside of IR35. Furthermore, employing staff is also an indicator of being in business on your own account.
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