The new MSC/MPSC rules - can anybody shed any light for me?

[Bigbird]

Hi, I wonder if I could ask some of you knowledgeable people a few things about the proposed legislation that is due to come in from April.

For background I am a self-employed book-keeper and I have a number of ex-CIS contractors that I do work for (mostly SA returns, some accounting) who are paid in a number of different ways.

Some of them are currently composite through various providers, a couple of them are running PSCs but through management companies rather than me or an accountant, one has a PSC that i do the books for and a couple of them are PAYE via agencies but claiming some reliefs for various bits and pieces that they need for the job.

As far as I can see most of them will be affected in some way by these new rules, and they are asking for my advice about the best way to retain max income but I am a bit out of my depth and not sure what to advise.

I am tempted to suggest they all see accountants and look towards individual PSCs for their work that falls outside IR35 and just stick with direct pay from the agencies for work that would be caught, but tbh I can see this losing me their returns business to their new accountants so it's not my favourite option!

One of the lads who works as a "gang" of 4 has said that his current composite provider has suggested that rather than individual PSCs they form a Ltd Co between the 4 of them with all 4 being directors and shareholders (different classes of share). The Co would have its own bank account that they would be signatories to but the provider would maintain posession of the cheque book and electronic access, he would also do all the stuff that he does at the moment ie pay the revenue and VAT, hold the pay and accounts records etc.

Having read through the HMRC document re the proposed changes I'm not sure that this would be sufficient for them not to be covered by the new rules.

I don't know what to suggest for the best. Can I have your opinions?

[malvolio]

At its simplest, you can now either be an umbrella user and hence an FTE of the umbrella, or you can use a managed/composite company (MSC) or you can use your own limited PSC.

The rule change for the Umbrella/MSC is that anything that looks like a composite will require that full NICs and PAYE is deducted prior to payment, and expenses are on the same basis as those paid to FTEs - hence, no mileage from "home ofice" to work for example.

So the options are to set up your own LtdCo, or go umbrella properly as a PAYE employee. Anything that looks like a comp is effectively no longer economically viable.
That said, your clients need authoratative advice... It's all a bit of a minefield at the moment.