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Public sector contractors brace for more tax scrutiny

If you’re a contractor working in the public sector, you’d better prepare yourself for more tax scrutiny to come your way in the future, if one contracting trade association group’s warnings are to be taken seriously.

The PGC says that it has gotten its hands on some leaked taxation documents stating that the current working system in the government is going to go through a rather significant shake-up in the coming months. One of the most significant changes, according to the trade association, is that any contractor that is on a longer term agreement or receiving a higher daily rate will soon have only two choices when it comes to their employment: have their contracts ended, or operate within IR35.

PCG’s managing director, John Brazier, says that there are certain harsh realities that will accompany such a move, as a massive skills and knowledge gap in the IT contractor sector for public contracts, due to how much project work exists for the public sector. The end result could be a destabilisation for many government departments, Mr Brazier added, as the government effectively shoots itself in the foot by eliminating the public sector’s access to experienced and skilled freelancers.

One of the biggest benefits that freelancers and contractors bring to the employment field is through their flexibility; employers can make use of contractors on a per-project basis, paying only what they need to get certain work done instead of having to be yoked with a permanent worker. However, making it harder for contractors to work on pubic sector projects is essentially throwing the baby out with the bathwater, and will most likely complicate the UK’s economic recovery even further.

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