The tightening of the Intermediaries Legislation (commonly known as IR 35) that the Chancellor referred to in his autumn statement and as further announced in the Draft 2013 Finance Bill on the 11th of December 2013 is targeted specifically at office holders. Office holders means individuals who hold an office (an executive, non-executive director or company secretary) on the board of a company.
From 6 April 2013 any payment to a PSC from a third party for the provision of an individual who is an 'officer holder' will be deemed to be employment income whether the PSC or the individual is registered as the office holder of the third party.
What this means is that HMRC can invoke IR 35 and seek recovery of tax under PAYE from the PSC when PAYE has not already been applied e.g where dividend income has been taken.
Whilst a contractor or worker can challenge any IR35 assessment by seeking to demonstrate his/her employment status before a tribunal, it would appear that where an individual holds an office he/she will be automatically within the scope of the IR 35 legislation. Such individuals, who currently receive income in the form of dividends, may therefore face a significant increase in their tax liabilities, and could seek to increase the fees they charges as a result.