Opinions on April's MSC changes?

[nicolekobie]

Hi,

I'm a journalist working on an article about the taxation changes for contractors using managed services companies. I'd like to get some opinions on what UK IT contractors think of the changes and how you'll be dealing with them -- by switching to an umbrella or to a limited company or another alternative.

My deadline's this afternoon, so if you're willing to speak to me, drop me a line.

Thanks

[malvolio]

Depends who you talk to, but from an IT perspective...

Us LtdCo people are laughing our socks off at all those who have ignored our advice, we believe that genuine brolly users are unaffected, and we think that MSC users who are merely trying to skim taxation are getting what they deserve - they pretend to be freelance but take none of the responsibililties so why should they get the tax breaks?

MSC users will see it as an unparalleled attack on their freedom and yet another stealth tax by taking away the God-given rights to expenses and divis because they really are in business on their own account and just want to outsource all the hard bits, like banking.

Brolly users won't understand what all the fuss is about


However, step outside IT and there are a lot of engineers, surveyors, locums, architects, temp medical staff and a pile of other professionals working through MSCs who have never had the umbrella/OwnCo option. They are the ones you need to talk to... but you will probably find they know nothing about it.

[nicolekobie]

Thanks for the insight... would you mind dropping me an email (as above) so I could ask you a few more questions?
Thanks!

[tim123]

I agree with malvolio, except to add that it isn't just 'other professions' that have jumped (been pushed) onto the MSC bandwaggon, but blue collar workers onm 7-10 quid ph as well.

This latter group should really be working agency PAYE (with the agency picking up the payroll costs) like they always used to.

tim

[Ivor1]

Depends who you talk to, but from an IT perspective...

Us LtdCo people are laughing our socks off at all those who have ignored our advice, we believe that genuine brolly users are unaffected, and we think that MSC users who are merely trying to skim taxation are getting what they deserve - they pretend to be freelance but take none of the responsibililties so why should they get the tax breaks?

MSC users will see it as an unparalleled attack on their freedom and yet another stealth tax by taking away the God-given rights to expenses and divis because they really are in business on their own account and just want to outsource all the hard bits, like banking.

Brolly users won't understand what all the fuss is about


However, step outside IT and there are a lot of engineers, surveyors, locums, architects, temp medical staff and a pile of other professionals working through MSCs who have never had the umbrella/OwnCo option. They are the ones you need to talk to... but you will probably find they know nothing about it.

Agreed to a point, but I also feel MSC themselves are somewhat to blame, in the way they sold the schemes. I dont believe its fair to say also all users of the schemes would of been inside IR35 had they not used them, alot would of been outside, just because they wanted to pay someone else to do the paper work for them doesnt mean they werent in business for themselves. And for the record I never claimed dispensation etc

[malvolio]

Agreed to a point, but I also feel MSC themselves are somewhat to blame, in the way they sold the schemes. I dont believe its fair to say also all users of the schemes would of been inside IR35 had they not used them, alot would of been outside, just because they wanted to pay someone else to do the paper work for them doesnt mean they werent in business for themselves. And for the record I never claimed dispensation etc

Yes, but it's not about IR35, it's about people setting up artificial arrangements to avoid tax. While we know avoidance is perfectly legal, Gorgon does not like people taking the michael out of the system and has devised a way to stop it without tramping on the existing Limnited Company structure.

Despite the marketing hype, it is clearly not in the spirit of the law to take a 20% reduction in gross tax paid merely by asking someone else to set up a pretend company in which you have no interest. That is the HMG argument, and that is why the course they have taken is so punitive.

[Ivor1]

Yes, but it's not about IR35, it's about people setting up artificial arrangements to avoid tax. While we know avoidance is perfectly legal, Gorgon does not like people taking the michael out of the system and has devised a way to stop it without tramping on the existing Limnited Company structure.

Despite the marketing hype, it is clearly not in the spirit of the law to take a 20% reduction in gross tax paid merely by asking someone else to set up a pretend company in which you have no interest. That is the HMG argument, and that is why the course they have taken is so punitive.

Overall for me I was actually better off with a limited than the MSC, % retained in limited is about 69% through the MSC it was about 67%. I agree alot did abuse the set up in that for their working arrangements would of meant 100% PAYE through a ltd. If it comes to it I will give them the money back and include a nice close up of my ass

Long and short of it for me is I agree that should stamp them out, its the back dating of tax Im not to comftable with (if they do it). Im lucky I can pay what I owe, but alot of people wont be able to. Yeah Im just p*ssed it might cost me, even though I didnt think I was doing anything wrong.

[malvolio]

This change won't get backdated, ISTR that was in the original announcement

[Maxamus]

However, step outside IT and there are a lot of engineers, surveyors, locums, architects, temp medical staff and a pile of other professionals working through MSCs who have never had the umbrella/OwnCo option. They are the ones you need to talk to... but you will probably find they know nothing about it.

im one of those engineers he mentions. A Highways engineer to be percise.
I use to have a brolly but i've gone to my own ltd co

[Ardesco]

This change won't get backdated, ISTR that was in the original announcement

Call me cynical but do you really think El Gordo is the kind of man who won't change his mind when he finds his purse strings a bit tight.....