Accountants and the new MSC legislation

[simondolan]

I don't know the answer to this, but are there actually any MSC providers still running as if nothing has happened? Surely nobody would be so foolish. Which begs the question are there any MSCs left to crack down on?! ).

Of course not, but there are ex MSC's now trying to rebadge as accountants whilst still trying to offer much the same service as they did before. Also, whilst most of the MSC's are now gone, if the Revenue don't legislate they would simply come back again.

What has happened to the revenue's targets ... 1000s of contractors previously in MSCs are now running their own Ltds, Carter Allan has an 800% increase in business bank account applications, accountants are scooping up all the ex-Giant and co. business. Ultimately the majority of ex-MSCs if not now will eventually be Ltds in my opinion. They might go umbrella for a while.

So what have HMRC gained apart from making our lives harder? They haven't got the taxes they want so they are still going to come after us ).

Whilst a massive amount of contractors are currently forming their own Companies, at least an equal amount are going to umbrellas, so the tax take will undoubtedly be massive

Can individual accoutants ask HMRC for written confirmation they are not affected by new legislation? (I doubt it).

Yes, they can, and no doubt will once the final legislation is in place.

[Bradley]

On message

Not true.

Direct from the Treasury:

"An accountant running an accountancy practice, providing services recognised by the accountancy regulatory bodies, would not fulfil the dual criteria in section 61B(1)(d) and is therefore outside the legislation, even where a sizeable proportion of the client base are service companies."

Hi Simon

I have to say that I wasn't really thinking about SJD as you are regulated by the tax institute. I was really thinking of those "accountancy" firms that are not regulated and who have a client base consisting 99.9% of PSCs a large majority of whom were MSCs in the past. As I understand it HMRC have already let it be known that that type of firm will be targetted.

I think what I am saying was correct but you have rather pounced upon it as a personal attack. It wasn't.

I also have to say that I think that in the future, accountancy firms, regulated or not, will run this risk if a large part of their business consists of services to PSCs. As I think has been discussed above I can't see the Treasury accepting the position where all who have been MSCs form PSCs and carry on with the help and support of specialised firms. If that is the case then they really haven't solved their "problem" and the next step is to outlaw any form of advice to PSCs.

The situation is, of course, farcical because as has already been said above every company formed as a PSC is as legit as every other company. Why should they not be able to access the services of firms of accountants who are able to act for a reasonable fee because of economies of scale. All of the "Big 4" accountancy firms wouldn't be able to provide this service at 5 times the cost!

The real answer is to force big business to employ people and pay accordingly but that would be political suicide for Gordon Brown.

[Lewis]

Yes, they can, and no doubt will once the final legislation is in place.

That's great news. Any idea when that might be? I think I heard September or something for royal assent ??

[grahams]

Not true.

Direct from the Treasury:

"An accountant running an accountancy practice, providing services recognised by the accountancy regulatory bodies, would not fulfil the dual criteria in section 61B(1)(d) and is therefore outside the legislation, even where a sizeable proportion of the client base are service companies."

Interesting quote, can you provide the source as I thought the Revenue were deliberately making it vague.

[simondolan]

Interesting quote, can you provide the source as I thought the Revenue were deliberately making it vague.

They are not making it deliberately vague - they haven't finalised the legislation yet - what they are trying to do is to make sure the ex MSC's are caught whilst exempting proper accountants providing normal accountancy services.

I am not going to mention names on a public forum, but I have spoken to the people drafting the legisation at the Treasury and the quote given was from one of them.

[Bradley]

Promoting or Facilitating

Simon - since you seem to have the ear of the Treasury what's their take on what the above two activities comprise of?

Does it include, for example, the promotion of PSCs (whatever they are) as a tax avoidance vehicle?

[simondolan]

Simon - since you seem to have the ear of the Treasury what's their take on what the above two activities comprise of?

Does it include, for example, the promotion of PSCs (whatever they are) as a tax avoidance vehicle?

"To be within the legislation (specifically section 61B(1)(d)) a person must both be carrying on a business of promoting or facilitating the use of companies to provide the services of individuals, and be involved with those companies. Involved is defined by reference to five criteria in section 61B(2)."

"The legislation seeks to distinguish between an accountant in the business of being an accountant, providing accountancy services, and an MSC provider, in the buiness of being an MSC provider (who may have accountants on the payroll) who provides services beyond those recognised as accountancy services"

"It is not the intention that the MSC legislation catches accountancy services provided as part of an accountancy business"

I don't know what the exact final form of the legislation will take, but it is clear to me that genuine accountancy practices will not be caught up in it.

[Bradley]

Involved

"To be within the legislation (specifically section 61B(1)(d)) a person must both be carrying on a business of promoting or facilitating the use of companies to provide the services of individuals, and be involved with those companies. Involved is defined by reference to five criteria in section 61B(2)."

I would think that the word "involved" takes professional accountancy services out of the loop anyway because like you said before clients are free to take advice or not. Typical MSC providers railroad their "clients" down a particular road e.g. dividends and not salary.