Outsourcing providers have joined the chorus of protest against the government?s plans to close a loophole used by contractors.
Services companies fear that the Inland Revenue?s plans to clamp down on tax avoidance by single person companies could seriously impact outsourcing deals.
A special pressure group formed last week after users, recruiters and politicians met to discuss the impact the proposals will have on the outsourcing sector.
Iain Sutherland, director of operations with IT accounting firm 3 sixty, said the proposed changes will also change the status of outsourced employees working under the day to day management of their client.
?We?ve had legal advice that such employees could be considered as working for the client, who would become responsible for their tax and national insurance,? he said.
Under the new regulations, individuals working as single person companies will pay the same taxes as permanent staff, which could lop off 25 per cent of their income.
The government?s final plans will be published in autumn and take effect from the next financial year.
The British Computer Society?s contractors group has drawn up a six point submission to the Treasury, which it says answers concerns about unfair tax avoidance, while preserving the contractor system.
For further stories see 22 April issue of Computing
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