IPSE revives Freelancer Limited Company plan

Contractor body IPSE is returning to the idea of a Freelancer Limited Company (FLC).

In fact, members of the Association of Independent Professionals and the Self-Employed (IPSE) are being invited to respond to an internal consultation on the ‘FLC.’  

Floated by the association in 2014 as a corporate form that contractors could use without the burden of IR35, the FLC was recommended last year to a Labour Small Business group.

It was then submitted to chancellor George Osborne ahead of his 2014 Autumn Statement and his two subsequent Budgets, as being a business structure he should consult on.

Neither the Labour small business group nor the government – in its current form or previously in coalition – took up the FLC proposal. And contractors' tax advisers warned against it.

But earlier this year, IPSE engaged accountancy giant EY to help develop both the concept and model of the FLC, which the association now believes has fresh impetus.

“The July Budget clearly indicated that the government is looking to reform taxation in this area,” EY’s Chris Sanger said of PSCs and contracting, pointing to four ‘anti-PSC’ measures.

In a letter to IPSE, Mr Sanger added: “I believe that the development of the FLC as a potential safe harbour represents a sensible policy approach in these uncertain times.”

The operating environment for contractors has indeed “become even more hostile” since the FLC was first mooted, according to Simon McVicker, a director of IPSE.

This further underlines “the urgent need to propose a solution” because while IPSE has long protested against IR35, “decision-makers have told us we must provide alternative solutions”.

“Read our full proposals on the FLC, set out in the paper and provide feedback”, added Mr McVicker, addressing the association’s members. “The status quo is changing… [and] we must consider what the new status quo will be.”