A 'best practice' approach for contractors is needed

Monday 24 March 2014

In light of new legislation targeting 'off-payroll' workers and the news that another government-owned company's chief executive is a contractor, the PCG is calling for a best practice example of how to engage a self-employed individual.

The body claims clarification is needed as to how contractors and freelancers can be used in the public sector.

Chris Bryce, chief executive officer of the PCG, explained examples of malpractice when employing people off-payroll are "deeply unhelpful to the thousands of independent professionals out there who engage with their clients in the right way".

"The best way to avoid misuse of ‘off-payroll’ contracts without compromising the considerable competitive advantage delivered by freelancers is to adopt a best practice approach to engagement," he said.

However, the PCG stresses that instances of off-payroll abuse are still anything but the norm. Indeed, in the public sector, 94 per cent of people were able to assure the government department that they were working out that they were in compliance with tax.

Problems emerge, it seems, through the lack of consistency in the use of flexible workers.

While the Treasury is trying to take the situation in hand by reviewing off-payroll working, the experience is becoming a stressful one for some contractors, according to the PCG.

The body has now written to Danny Alexander, House of Commons chief secretary to the Treasury, offering assistance in drawing up a best practice guide.

"The only solution is clear guidance, created by those who understand the environment and operated consistently across all departments. That is why we are inviting Danny Alexander to work with PCG on this and end the uncertainty once and for all," Mr Bryce said. "We are calling on the Treasury to bring in the experts."

Disputes over off-payroll workers come as stars at the BBC are facing pay cuts and are being forced into normal working contracts.

In exchange for holiday pay and pension contributions, stars like Jeremy Paxman and Fiona Bruce will have to take a pay cut of as much as 25 per cent, The Telegraph reported.

Speaking to the newspaper, an agent representing some of the BBC's talent said that while the broadcasting agency needs the issue to be cost neutral to them, the stars also need to break even.

Many agents are now taking a united front and fighting back, so their clients get a better deal.

However, moving freelancers on to staff contractors began at the end of last year, after MPs accused the BBC of paying too many through personal service companies in a bid to reduce tax liabilities.

Research from Deloitte showed that in 2012, 96 stars at the broadcasting agency were paid over £50,000 per annum through personal service companies.

This way it is possible for high earners to pay 20 to 23 per cent in corporation tax on their income.

Indeed, being paid off-payroll is favoured by many in both the public and private sectors. However, this is largely for the benefits and flexibility of being a contractor.

By Victoria McDonnell

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