HMRC guidlines on ex MSC's

**exbrm** · 10 July 2007, 22:07

New guidelines issued today 10th July.
Seems OK for genuine if in own business with high street accountants, as we expected.
Not so clear for ex MSC's now "Accountants".
AT the end I checked 7 out of 7 OK's for high street accountants and 3 to 4 possibles / 3 to 4 nos for ex MSC's.

**Spiderman** · 10 July 2007, 22:47

It confused the hell out of me! I know buddies going with what seem to be PSC companies, where the company not the individual is running the whole show, payroll, invoicing etc and that I'd say was far too much control to get away with it.

All we need now is scrapping of IR35 and I'll have me own company LOL! Saves me this crap with expenses and dispensations!!

**malvolio** · 10 July 2007, 23:45

Ignore the legalese, the intent is quite simple.

If you were previouly with an MSC (which are clearly defined) you need to be very clearly working either through a full-blooded independent company, under an umbrella or under an MSC and paying employee's taxes. If you have merely switched from MSC to some kind of MSC-lite in order to keep taking dividends while taking no responsibility for the company's business, you are not following the rules and will get smacked.

**JKnz** · 11 July 2007, 07:44

Interesting reading.....

Not sure if it makes me feel more or less comfortable with the services offered by the likes of 1st Contact. They no longer are promoting company formation etc and you actually need to request assistance from their accountants when you need it.

However it looks like they meet the definition of a 'Back Office Service Provider' as they provide accounting/bookkeeping services exclusively to clients in the service company sector which means they are carrying on a business of facilitating the use of companies to provide the services of individuals. Unless they are also offering accounting services outside of the serivce company sector which I do not think they currently are. And what they offer is pretty much a standardised product so in actual fact im not overly comfortable with this....

Having said that with the way my company is run it would be unlikely they would be deemed to be actively 'involved' in my company based on the criteria outlined on pages 11 and 12 (i perform all invoicing and have control over finances etc) but it looks like the onus would be on me to prove this. In fact I dont really need them to do anything apart from where I request advice of tax returns etc....maybe i should look to get this service elsewhere or is it all too late?

**Spiderman** · 11 July 2007, 07:53

Someone I know is going through 1st Contact...Are they likely to be polaying into trouble going through them as they continue to take dividends yet my friend does nothing for herself as far as I can tell, they do payroll, etc all for her.

**JKnz** · 11 July 2007, 07:58

Originally posted by Spiderman

Someone I know is going through 1st Contact...Are they likely to be polaying into trouble going through them as they continue to take dividends yet my friend does nothing for herself as far as I can tell, they do payroll, etc all for her.

They shouldnt be doing her payroll.....as far as I know they stopped this from April 7th. Under the current setup her company's client should pay into her company bank account and as she is running the company she should pay herself from that company account into her own personal account and put aside funds for PAYE and NIC payments.

She should also be doing all the invoicing and filing of returns too but may request accounting assistance in preparing these returns

**Lewis** · 11 July 2007, 12:24

It's clarified some things but not others ... if it was ok for an ex-MSC provider to now provide just accountancy services then I wouldn't be confused, but I was under the impression that ex-MSCPs cannot just rebrand as accountants (maybe this isn't true).

I am specifically looking for things which differentiate the ex-MSCP turned accountant from the specialist contractor accountant that was never an MSCP in the first place. In terms of being in "the business of promoting and facilitating" the use of limited companies (page 8), I don't see how the ex-MSCP differs from the non-MSCP accountant in the new world; in that they both just provide accountancy services to ltd companies and advertise these services online and by word of mouth etc...

Then, considering "involvement" ... it seems you cannot be part of a "standardised corporate solution package" (page 15) where you are offered a "standardised product", even if it is offered by an qualified accountant (Page 9), where a "standardised product" is one where everyone gets the same advice (e.g. on salaries and expenses etc.) (page 14). So does that mean that an accountancy firm who offers a standard "contractor" package (i.e. where everyone gets same spreadsheet, same advice, same accounting services etc..) is "involved" ? If so, I would think a lot of people using the big contractor accountants are definitely "involved".

But surely providing a standard solution is very hard for an accountant not to do if their clients are mainly contractors, afterall there are a limited set of services that contractors want and I would expect an accountant to give the same advice on what expenses are allowed to all their clients anyway!

So the question is ... how will the ex-MSCP get caught or how will the genuine all-my-clients-are-contractors-and-get-the-same-advice accountant escape ..... depending on how you look at it?

I have been hanging around not joining one of the big well known accountancy firms waiting for clarification that they will not be called an MSCP and I still do not feel confident enough to join anything other than a small high street firm with a few contractors. But that's not what I want to do, as they don't have the specialist contracting knowledge of the big-boys.

That said ... if page 47 could be taken alone I would feel perfectly safe.

Thoughts? I am just being way to paranoid? Maybe the ex-MSCPs are going to be ok as accountants after all ...

**Bluebird** · 11 July 2007, 12:41

The paragraph in question seem to be:
It seems to me to depend on "how much" of the business [discernable] is dedicated to providing company solutions - again the HMRC have sought to clarify and have left woolly terms in theri description.

The following are an MSC Provider

�� A Service Provider carrying on a business specifically of marketing and/or providing corporate solutions and services to individuals providing their services to end clients
�� A firm of accountants carrying on a discernable part of their business specifically to market and/or provide corporate solutions and services to individuals providing their services to end clients. (In this case the firm would only be an MSC Provider in respect of that discernable part of the busiess.)
�� A business which terms itself a Tax Adviser, Service Provider or whatever but which specifically markets and/or markets corporate solutions and services to individuals providing their services to end

**JKnz** · 11 July 2007, 12:42

Yeah that list of questions on page 47 does indicate some comfort apart from question 6 where I am not sure if people like 1st Contact actually provide support services to clients other than managed company clients....I'm sure there must be other accounting firms in this position too or do they merely specialise in this area and welcome other clients too...

HMRC guidlines on ex MSC's