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Jargon Busting - Are you a PSC of your PSC?

In the great tradition of government-speak, HMRC and companies house have come up with the same acronym for different things, both of which can apply to the same small business.

PSC – According to HMRC

This means Personal Service Company. What is this?

This is usually a one-person company providing professional services to clients. Think IT contractor invoicing a bank for working on an IT project. Or marketing expert taken on to advise on expansion into a new area.

Why does it matter?

PSCs are being scrutinised by HMRC in case they are providing employment services to clients, but not paying employee taxes, such as national insurance. HMRC’s concern is usually greater when the PSC has been providing the same services for a long period of time to the same single client. After a while, the consultant may become so much part of his client’s organisation that he may have stopped being an independent and now took more instruction from his client. Plus many other factors are taken into account.

PSC – According to Companies House

This means Person with Significant Control. What is this?

This is someone who owns at least 25% of a company, and needs to be disclosed and updated at Companies House. Even when the person moves, their address must soon afterwards be updated at Companies House.

Why does it matter?

A relatively new concept, it’s designed to prevent people hiding the true ownership of a company, being required to maintain these PSC records.

In Conclusion, you’ll appreciate that many small consultant businesses, will be a PSC of their PSC! Confused? Joined-up thinking would be appreciated at times!

 

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