Invoice before March 6th, PSCs told

Contractors working in the public sector should submit their invoices before March 6th -- to ensure payment is received before April 5th, the UK’s contractor trade group recommends.

Failure to do so could subject the payment that such PSC workers normally receive to “punitive” new tax charges, which are due to be applied from April 6th, says IPSE.

From then, all payments from public sector clients (or agencies in a contractual chain where the end-user is a public sector body), might be made via RTI, which is typically just for staff.

So rather than take the time and risk of assessing each contractor’s IR35 status, as the April rules oblige them to, end-users will simply put all PSCs on RTI; effectively payrolling them.

“Evidence is already emerging that public sector clients are unwilling, or unable, to make the IR35 assessment”, said the Association of Independent Professionals and the Self-Employed (IPSE).

“[So] regardless of their [PSCs’] status and without considering whether this reflects the reality of the arrangement…from 6th April, tax and NICs will be deducted at source.”

The resulting “significant loss of income” for contractors could become a prospect much earlier than PSCs anticipate; such as on all work carried out as early as from February 1st.

“Any contractors which invoice one month in arrears, on 30-day payment terms, will need to get their invoices issued in the first week of March,” said IPSE chief executive Chris Bryce.

“[And] any work completed during March but paid for after the 6th of April will be subject to the new rules – I’d recommend insisting on weekly or even daily payments if you can, in order to minimise the losses you will suffer as a result of this ill thought out legislation.”