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MSC stuff in Telegraph

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    MSC stuff in Telegraph

    http://www.telegraph.co.uk/money/mai...20/cntax20.xml
    http://www.telegraph.co.uk/money/mai...0/ccom20.xml#1

    Urgent talks to toughen rules for contract workers
    By Roland Gribben
    Last Updated: 3:20am GMT 20/03/2007

    Comment: Banking sector stirs...and Barclays has its work cut out
    Treasury officials are engaged in urgent talks with tax experts in advance of tomorrow's Budget to tighten new regulations aimed at ending tax avoidance schemes used by up to 250,000 contract employees.


    Mr Brown is anxious to ensure that the new regulations are watertight


    The schemes are mainly used by those working in the IT industry, but also by nurses, teachers and others. The Treasury is concerned that efforts by advisers to find a way around the rules will thwart attempts to plug the loophole and raise an extra £1bn for the exchequer.

    The Chancellor is anxious to ensure the regulations are watertight. He has already been forced into a U-turn on a pre-Budget tax avoidance measure aimed at 5,000-6,000 wealthy individuals, including City traders, benefiting from "sleeping partner" status in companies with an investment risk.

    Business advisers have moved swiftly to recommend contract workers switch from using the managed service companies targeted by the Treasury to setting up a personal service company to protect their tax cushion through director status.

    Treasury officials are understood to have called in senior figures in the tax "industry" yesterday to discuss the issues and scope for beating the new rules amid confusion about whether the personal service company alternative is a "runner", and criticism about the quality of advice being offered to contract workers facing the loss of a tax perk.

    John Chaplin, a director at KPMG, the accountancy and consultancy business, believes contract workers are not being fully briefed by promoters of the new schemes about how they can protect their current tax status. He said: "We have looked at some of the literature being sent out and feel it doesn't present the full picture. In fact we think they are providing misleading information."

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    Thousands of contract workers have rushed to register their own companies ahead of the new tax year.

    Companies House is struggling to cope. Some banks, wilting under the weight of new business, have been offering the equivalent of "virtual bank accounts" to cope with the backlog.

    Treasury and Revenue & Customs officials are confident the new legislation is strong enough to survive the efforts to find a safe tax passage through the regulations but are worried at the prospect of administrative delays in tax collection.


    Urgent talks to toughen rules for contract workers
    The Chancellor is struggling to get all his tax ducks in a row. Hardly surprising because the Treasury pond is full of them.

    The managed service companies that look after contract workers are proving particularly awkward. They provide a convenient shelter for an estimated 240,000-250,000 contract staff, mainly in the IT industry, to offset tax on earnings and frustrate the taxman's attempt to bring them into the net. Brown has attempted to change the rules, but this just provided another demonstration of the inexhaustible imagination of tax advisers. In place of the managed company, the tax experts now suggest they become a personal service company complete with director status for the individual and tax "protection".

    As a result Companies House has been flooded with new registrations while banks have been forced to offer "virtual" bank accounts to cope with the rush of new business before the tax year-end. There is another by-product - an exasperated Chancellor, dismayed at seeing his tax avoidance crusade run into more trouble.

    There is of course no guarantee that the personal company provides an escape route for the fleet of foot and agile mind but the Treasury has been burning the midnight oil to ensure the new tax noose is uncomfortable enough to cut short the elevated status of a new breed of directors.

    Treasury mandarins were huddled in discussions with some of the City's finest tax brains yesterday to ensure that there are new measures in the Chancellor's red box by 12.30pm tomorrow.

    One wonders, however, if, in their haste to rush through new legislation, these Treasury officials will end up with something just as inadequate. Once again, the only winner will be the tax advisers.

    #2
    Jesus - talk about last minute. Are these proposals done on the back of a fag packet also?
    Rule Number 1 - Assuming that you have a valid contract in place always try to get your poo onto your timesheet, provided that the timesheet is valid for your current contract and covers the period of time that you are billing for.

    I preferred version 1!

    Comment


      #3
      Do you ever get the feeling that the government really, really doesn't like us?

      Comment


        #4
        I get the feeling that they are making it up as they go along and really have not got a clue what they are doing. Not so much a case of the left arm knowing what the right arm is doing and more a case of both arms not having a clue about the existence of each other. For something which affects something as important as the earnings of 250k people this really is a disgrace. Things like this should not be rushed through to meet some self imposed deadline otherwise we end up the bolloxs this crowd have already landed on the statute books. But they will get away with it as there is no opposition.
        Rule Number 1 - Assuming that you have a valid contract in place always try to get your poo onto your timesheet, provided that the timesheet is valid for your current contract and covers the period of time that you are billing for.

        I preferred version 1!

        Comment


          #5
          Originally posted by bobhope
          Do you ever get the feeling that the government really, really doesn't like us?
          It isn't quite that. They think that for someone who could possibly do their work in the framework of salaried employment, there are only 2 ways they can work:
          1. salaried employment.
          2. tax dodge.

          I do however have the feeling that the distinction between tax evasion (a crime) and tax avoidance (legally doing things in a way that attracts less tax than another way might) is seen as artificial now. If you're paying less tax than you "should", then you are unfairly dodging tax. Little matter that it is legal at the moment: a tax avoider is just a tax evader that hasn't been properly caught in legislation yet. When he is, his crime will be backdated.

          The "correct amount of tax" is of course what an employee would pay. Which are you, employee or tax dodger?
          God made men. Sam Colt made them equal.

          Comment


            #6
            Either they are stupid or we're all being herded into limited companies for IR35 Mk II. Take your pick.
            ...my quagmire of greed....my cesspit of laziness and unfairness....all I am doing is sticking two fingers up at nurses, doctors and other hard working employed professionals...

            Comment


              #7
              I will destroy you.

              Comment


                #8
                Changes after white paper?

                I thought the white paper for the MSC legislation was published inJan/Feb and so can't be changed now. So any urgent discussions would have to remain just that - discussions.

                Comment


                  #9
                  Originally posted by Lockhouse
                  Either they are stupid or we're all being herded into limited companies for IR35 Mk II. Take your pick.
                  I've thought all along this will lead to IR35 Mk II.
                  Cats are evil.

                  Comment


                    #10
                    What is still not clear is whether this new legislation means they are going to try and retrospectively tried to claim back the tax when someone was using a MSC prior to the 6th April. I have seen people say 'no they cant its new legislation' but the more I read articles on it though not mentioned directly the wording implies they will try and back date it.

                    No one seems to know on this I have asked a few accountants and legal eagles but they dont know. Im I reading to much into it or is the retro application possible so we have to pack back dated tax ?

                    Comment

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