HM Revenue & Customs (HMRC) has issued new guidance on the Managed Service Company (MSC) legislation, and warns that it intends to take action against non-compliant companies.

HMRC says that where it considers that companies and partnerships otherwise fall within the MSC legislation, but claim not to be MSCs because the provider is an officer/partner of the intermediary, these companies and partnerships are in fact MSCs. “HMRC will now look for suitable cases to investigate and, where appropriate, challenge and litigate.”

The three types of intermediaries identified by HMRC as being potential ‘targets’ are: the ‘self-employed model’ where contractors work as sole traders via a specialist company the self-employed’ model as above but under Construction Industry Scheme (CIS) rules.

Offshore providers

HMRC says the guidance has been issued after it “considered fully” the arguments advanced by various types intermediaries as to why they are not MSCs.

Martin Hesketh, managing director of accountancy, tax advice and financial support services provider Brookson, told Recruiter that the guidance was a clear message that the Revenue was serious at “enforcing the MSC legislation”, including the debt transfer provisions. These could affect agencies, where they were involved

with non-compliant companies, added Hesketh.

The guidance is contained on HMRC’s website:

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