Personal Service Companies (PSC) FAQs

The policy applies across the University i.e. to all the University’s departments and also to the University’s subsidiary companies.

The legislation applies to all payments made on or after 6 April 2017, irrespective of whether they are a new contract or an existing contract.

If the assessment of the PSC concludes that the individual should be paid through the payroll, and PAYE tax and National Insurance deducted, then Employer National Insurance will be payable in addition to the new Apprenticeship Levy (from April 2017). VAT will also continue to be charged.

This is a complex area. Contractors working overseas may be affected by the new legislation, see HMRC for reference. In addition, there may be implications on their fiscal position in their host country. Departments should consult the Payroll for advice.

The Purchasing and Legal teams have produced amended contracts. Please see the relevant Purchasing webpages for more information.

Staff hired through TSS are already paid via the University payroll, so there is no need to declare them.

Once the employment status has been determined:

• If assessed as self-employed for tax purposes – send the invoice to the Payments Team with a copy of the Check Employment Status for Tax (CEST) outcome attached. Note, invoices for payment to individuals must not be entered into Oracle Financials by departments.
• If assessed as a PSC (the intermediaries legislation applies) – a PSC Payroll appointment should be set up on Core, and the invoice sent to the Payroll Team with a copy of the CEST outcome attached.

The CEST outcome should include the name of the individual and the name of the person completing the tool on behalf of the department. A new Quick Reference Guide (PDF) has been produced by Personnel Services.

Although HMRC may require certain PSC contractors to be paid as employees for tax purposes, they are advising that no employment rights will be associated with this. It is important that the distinction between being paid through the payroll and employment status is understood and that contractors understand that the University will not consider them to be employees and that none of the benefits available to staff will apply to them.

Yes. It will be for the University rather than the agency to determine whether the contract falls within the new off-payroll rules, and to inform the agency and/or respond to any request for this information from the agency within 31 days of the request.

The technical guidance from HMRC clarifies the engager does not need to know about Student Loans as these will be declared by the PSC itself as part of their self-assessment for tax. Those collecting information from a PSC for Core set-up purposes should point out the question in the Starter Form in this case is irrelevant.

This will be dependent on the individual’s contract, and advice may need to be sought from the University’s Legal Services office.

It is important to ensure that the HMRC Check Employment Status for Tax (CEST) tool is answered based on the facts of the contract and the reality of the arrangement in place.

The University has a duty to follow HMRC rules under which we would still have to make payment via payroll and account for PAYE tax and NICs. Termination of a contract would be the decision of the engaging department.