Given the publicity over the operation of the IR35 rules advisers may often overlook another tool in HMRC’s arsenal for tackling the perceived problem of disguised employees: the managed service company (MSC) legislation. Workers in MSCs are deemed to be within PAYE (including NIC) for all of their receipts including dividends. The MSC legislation takes priority to IR35 provisions. There are specific rules on transfer of debts which transfer the lost income tax and national insurance to directors of the MSCs in the first instance and then on to other parties ‘involved’ in the MSC arrangements; as a consequence the potential liability for a client falling foul of the rules runs further than any client relationship damage or negligence claim. With HMRC now focusing its attention on this area of legislation now is a good time to review how you interact with clients that provide personal...
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Given the publicity over the operation of the IR35 rules advisers may often overlook another tool in HMRC’s arsenal for tackling the perceived problem of disguised employees: the managed service company (MSC) legislation. Workers in MSCs are deemed to be within PAYE (including NIC) for all of their receipts including dividends. The MSC legislation takes priority to IR35 provisions. There are specific rules on transfer of debts which transfer the lost income tax and national insurance to directors of the MSCs in the first instance and then on to other parties ‘involved’ in the MSC arrangements; as a consequence the potential liability for a client falling foul of the rules runs further than any client relationship damage or negligence claim. With HMRC now focusing its attention on this area of legislation now is a good time to review how you interact with clients that provide personal...
If you are not a subscriber, subscribe now to read this content.
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