HMRC guidlines on ex MSC's

[Bradley]

Vague

I wouldnt class that as being linked to economic activity. If the accountancy fees were charged at say a set % of cash inflows or outflows of the company that would be linked to the economic activity but a monthly set fee (which is really just an annual fee pro-rata'ed) is not.

I'd agree with you Ardesco, I think that the differences of opinion reflect the vagueness of the "clarification".

I was basing what I was saying on the second paragraph of page 16 as HMRC indicate that the link between invoicing and accountancy fees can be "indirect". I think that the problem comes when you stop having an annual fixed fee arrangement and start charging a fixed fee monthly. The annual fee isn't so directly linked to the economic activity of the company but the monthly fee is.

[Ardesco]

You can always say it is an annual fee that you have aggreed to break down into 12 monthly chunks.

It is all a bit silly really as a company that is trading for 12 months is going to require more work to get the accounts done than a company that has only been trading for 3 months. The fee should be cheaper for the company that has been trading for 3 months, it's common sense really. if the IR are trying to make this a factor which ctaches you out and makes an accountant an MSC it just prooves that they are trying to do the dirty on all small businesses to prevent them paying dividends.

[JKnz]

I'd agree with you Ardesco, I think that the differences of opinion reflect the vagueness of the "clarification".

I was basing what I was saying on the second paragraph of page 16 as HMRC indicate that the link between invoicing and accountancy fees can be "indirect". I think that the problem comes when you stop having an annual fixed fee arrangement and start charging a fixed fee monthly. The annual fee isn't so directly linked to the economic activity of the company but the monthly fee is.

Theres no difference between the monthly fee and the annual fee.

Its an annual fee of XX amount and you could pay it in one lump sum or spread it in 12 even payments of X. The monthly fee is incurred and paid regardless of the economic activity of my company. I dont see how there can be a link here.

[Bradley]

Dole

Theres no difference between the monthly fee and the annual fee.

Its an annual fee of XX amount and you could pay it in one lump sum or spread it in 12 even payments of X. The monthly fee is incurred and paid regardless of the economic activity of my company. I dont see how there can be a link here.

I think that some providers charge on a monthly basis and if you stop contracting you stop paying your fee until you start contracting again.

[Ardesco]

I think that some providers charge on a monthly basis and if you stop contracting you stop paying your fee until you start contracting again.

The point being made here is if you pay a fee of £1200 for a years accountancy services, it is entirely reasonable to pay a fee of £300 for 3 months accountancy services, or £700 for 7 months accountancy service. the accountancy is simply charging you £100 to do your monthly accounts. If your company goes inactive for a month/3 months/2 years you would not expect accountacy fees to be paid while the company is inactive (Apart from a payment to do year end accounts which you will have to pay some money for anyway, or do yourself).

[Lewis]

IMHO it is purposfully vague and encompasses as many people as possible so that when they have finished battering MSC's they can then start looking at regular accountancy firms if they decide they want an easy way to collect more revenue.

Are there any MSCs to batter? Aren't they all 'accountants' now? And I can see nothing to distigusih them from the true accountants that have lots of contractors and offer similar services to all. So who is there to catch?

Unless you simply view it as a great success as all MSCs have now closed shop.

[malvolio]

Are there any MSCs to batter? Aren't they all 'accountants' now? And I can see nothing to distigusih them from the true accountants that have lots of contractors and offer similar services to all. So who is there to catch?

Unless you simply view it as a great success as all MSCs have now closed shop.

It was never about MSCs. It was about people pretending to be employed through their own virtual company, taking no part in any kind of decision making or risk management, and then claiming the same taxation benefits as everyone else. And, incidetnally, screwing the tax regime for everyone while Gorgon and his orcs tried to reclaim tax from people that actually should have been paying it

[Bradley]

Missing the point

The point being made here is if you pay a fee of £1200 for a years accountancy services, it is entirely reasonable to pay a fee of £300 for 3 months accountancy services, or £700 for 7 months accountancy service. the accountancy is simply charging you £100 to do your monthly accounts. If your company goes inactive for a month/3 months/2 years you would not expect accountacy fees to be paid while the company is inactive (Apart from a payment to do year end accounts which you will have to pay some money for anyway, or do yourself).

Absolutely agree with you but my point is that that seems to meet the HMRC criteria for deciding who is involved with an MSC. This follows on from what is said at 2.3:

2.3 HMRC is aware that there is a market for specialist service providers providing corporate solutions to workers genuinely in business on their own account. Whilst such specialist providers may be MSC Providers, it is important to remember that a key issue is whether the services provided constitute being involved with the client company.

I think that what they're saying above is that any accountant that specialises in contractor clients is an MSC provider.

That's not fatal, however, unless they are involved with an MSC.

Monthly fees may make them involved. I think there's an unacceptable risk to contractors because this stuff really isn't clear. I'd like to see HMRC give a ruling on whether or not a contractor is caught by this.

[Ardesco]

Monthly fees may make them involved. I think there's an unacceptable risk to contractors because this stuff really isn't clear. I'd like to see HMRC give a ruling on whether or not a contractor is caught by this.

Do you honestly expect them to clarify something when they can just leave it vague and give themselves other options for revenue collection in the future???

[Bradley]

Yes

Do you honestly expect them to clarify something when they can just leave it vague and give themselves other options for revenue collection in the future???

I think if enough contractors force their "accountants" to demand it of the Revenue then, yes. I also think that most accountants and agencies will want this so that they can avoid paying someone else's PAYE liability.