HM Revenue & Customs have published a guidance note on new anti-avoidance laws for Managed Service Companies and their users.
An update on what constitutes a MSC has been given, alongside clarification of the third parties that HMRC will approach, and in what order, to recover debts.
The guidance states that a service provider must both fulfil the definition of an MSC Provider and be involved with their client companies for the legislation to apply.
It was needed to clear up “perceived ambiguity” in the legislation, and to make HMRC’s position clear that the rules, contained in the Finance Bill 2007, meet the government’s intent.
The legislation does not intend to target persons “genuinely in business on their own account.”
It also makes clear that professional advisors who may be involved with a company but who only provide legal or tax services are beyond the scope of the legislation.
“Persons who promote or facilitate companies generally, as opposed to companies specifically to provide the services of individuals, are not MSC Providers,” the guidance states.
The guidance note adds MSCs must treat all payments received by workers providing their services through such companies as income subject to PAYE & National Insurance.
