The recruitment industry's concerted opposition to the Treasury's plans for composite companies is gathering pace.

The Association of Technology Staffing Companies (ATSCo) is meeting with the Treasury this week. It is focusing on the proposals to make agencies liable for uncollected tax (Recruiter, 24 January). Ann Swain, chief executive of ATSCo, said: "If recruitment companies are not running these schemes and contractors are joining them freely, why should recruitment companies be liable if contractors are not paying the right amount of tax?"

She added: "Companies should have a statutory defence... As long as recruitment businesses make reasonable checks (on the status of the contractors), they should not be responsible for any outstanding tax owed by contractors." The government is looking to introduce new legislation on 6 April, despite protestations from the industry that this is too soon and there has been inadequate consultation. There is still great uncertainty about what form the new legislation will take.

Adrian Marlowe of Lawspeed has already met with Treasury officials. He put a number of points to them, including objections to proposals to change the tax treatment of expenses. He said: "To expect workers to travel long distance to provide their work services without some basis for allowance of travel and subsistence could impact upon the availability of flexible resources in the UK."

Phil Richards, chief executive of Manager Group, which sets up companies for freelancers, said: "Freelancers really need to consider their options wisely, and not assume that they should stay in their current composite provider.

Freelancers need to look at the possibilities of working through their own limited company or 'Personal Service Company' which is not caught by the regulations.

For agencies, the biggest effect may be the administrative burden of contractors changing the way they provide their services.

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