Definition of "professional accountants" in the context of MSC providers

[kingshuk]

I thought shareholders are not responsible for the company's performance hence are not liable.

Surely the director has some responsiblity and accountability. I asked a similar question sometime back in this thread (about how the IR plans to take the money back) - http://forums.contractoruk.com/thread15535.html
There are some answers. Of course don't know how many are correct.

THEPUMA is an accountant. So his answer has more credibility I guess.

[Bigbird]

Under the new 3rd party recovery legislation shareholders fall into the category of "associates" of the company and can be held liable.

The list in order of risk more or less goes
Company
Director(s)
Associates - Co Sec, shareholders
Scheme Provider
Agency
End User

But that's very simplified. And only for a company caught my the MSC legislation (at the moment) though.

[simondolan]

HMRC's briefing note issued on 30/03/07 says that "professionally qualified persons normally would not be considered to be an MSC Provider except to the extent that they are in the business of promoting and facilitating the use of companies to provide the services of individuals.".

This is important wording and one which in my opinion is quite clear.

Do Accountants (as opposed to Giant and the like) promote and facilitate the use of Companies? Of course not. What they do is to provide services to those individuals that choose to run consulting businesses.

Facilitating means taking all or most of the responsibility and control away from the "worker". That can hardly be said for our clients who prepare their own bookkeeping, administer their bank account, raise sales invoices, find their own contracts, choose both how much and when to pay themselves etc etc. Compare this with a typical MSC where they raised a time sheet and nothing else.

[THEPUMA]

Simon

That may be the case but that sentence only applies to professionally qualified accountants.

If you don't qualify under that exemption, you have to go back to the basic legislation which catches everyone.

Joel

[rawly]

PCG has just issued a statement to clarify the situation, and this is part of it:

"......However, one leading provider, Giant, recently announced it is abandoning PSCs entirely and switching all its contractors to a PAYE Umbrella.

To further clarify the issue HMRC also issued a statement on the effects of the new legislation, saying: "HMRC has confirmed its view that the legislation is not intended to, nor does it, encompass service companies used by those genuinely in business on their own account and the accountancy services provided to such companies.

"The legislation addresses the discrete issue of those seeking to avoid employed levels of tax and NICs by providing services though a company which is promoted and facilitated in a way that is quite distinct from professional accountancy services."

[freshblue]

This is important wording and one which in my opinion is quite clear.

Do Accountants (as opposed to Giant and the like) promote and facilitate the use of Companies? Of course not. What they do is to provide services to those individuals that choose to run consulting businesses.

Facilitating means taking all or most of the responsibility and control away from the "worker". That can hardly be said for our clients who prepare their own bookkeeping, administer their bank account, raise sales invoices, find their own contracts, choose both how much and when to pay themselves etc etc. Compare this with a typical MSC where they raised a time sheet and nothing else.

Simon is largely correct in my opinion, but I think some accountants and book keepers will have to be careful in how promotion and marketing take place. For me offering solutions to problems before the question is known (my take on IR35 practice) is a red rag to a bull. Anyone who promotes tax loss insurance alongside this and also has a predominant consulting mix of business as opposed to general practice will it seems have a challenge from HMRC.

Would an accountant calculate dividends on a weekly or monthly basis and take a weekly or monthly fee for it? Aside from the year end stuff based on contract income and expenditure why would a contractor on a time and skills basis need an Accountant? - This is how I believe the HMRC view it.

[Bigbird]

Can I just point out here that the legislation actually doesn't mention the word "qualified" anywhere?

The Budget Notes 2007 actually say "There will also be an exclusion for people providing professional accountancy and legal services"

HMRC themselves (I rang the specialist office whose number is in all the documents on budget day) told me that you do not have to be a qualified accountant to provide accountancy services.

[Bigbird]

Would an accountant calculate dividends on a weekly or monthly basis and take a weekly or monthly fee for it?

Well surely yes, if that was part of his service agreement with the client..........

[simondolan]

Simon

That may be the case but that sentence only applies to professionally qualified accountants.

If you don't qualify under that exemption, you have to go back to the basic legislation which catches everyone.

Joel

Well, we do of course qualify, but my point would be that you canot rely on the qualification alone.

[THEPUMA]

Simon

I agree entirely. In addition to being a professional accountant, you must not promote and facilitate the use of companies to provide the services of individuals.

This thread was not particularly targetted at you. It was generic.

But when you say you "qualify", I am still unclear whether or not SJD as a firm is regulated by the ICAEW. Can you clarify?

Joel