House of Lords to probe personal service companies

20 Nov 13
Peers have formed a new select committee to look into the use of personal service companies, including their prevalence in the public sector

Baroness Noakes, who is to chair the committee, said its inquiry would take a broad look at the formation of the companies, the extent to which they are used and implications for tax collection and National Insurance.

‘In these economically difficult time, it is important that the government receives the tax it should rightfully be receiving, from all those who should be paying it,’ she said.

‘Equally, we need to ensure that the tax system does not place unreasonable burden on taxpayers. Of course, this is a complicated topic.’

One of the specific questions the inquiry will attempt to answer is the extent to which PSCs are used in the public sector and whether those engage in public bodies should be prevented from working through a PSC.

The use of PSCs by some senior figures in the public sector hit the headlines last year when it was revealed that the chief executive of the Student Loans Company was paid this way to reduce his tax liability.

The Public Accounts Committee has criticised the use of such ‘off-payroll’ arrangements in the public sector.


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