Reply to: Definition of "professional accountants" in the context of MSC providers

[Bright Spark]

As long as your accountant is just 'merely' providing accountancy services
ie Vat Return, PAYE, Company Accounts
which I beleive SJD and NW do, they will not be caught by HMRC rules.

HMRC have quite rightly not defined 'merely' so that companies who want to
continue like the old illegal MSC's by saying were just providing
'accountancy services' are not allowed to .

There are a few shout99 articles below which discuss this.

Shout99 ask treasury to clarify position
http://www.shout99.com/contractors/s...le.pl?id=42919


Definition if MSC under new legistlation
http://www.shout99.com/contractors/s...le.pl?id=42853

[Bluebird]

As I've said b4 I think HMRC are being vague on purpose so as to push as many people into PAYE as possible, once they see how many are left then they'll go for the next easiest route to catch more - and that will be either trying to get SJD & NW with the existing legislation, or if that fails after one or two test cases [ any volenteers ? ] then [ as with IR35 ] they'll just bring in more legislation that traps the guys with those accountants whether they are recent additions or long timers, or in fact even if they aren't IT at all.


SJD & NW should be a bit more proactive and perhaps remove any of their products that could be construed as 'promoting' PSCs

[Lewis]

Hi Denny,

You've very nicely summed up all of my concerns!

"What about those who already have limiteds before the 6th through one of these big providers" My guess is that would be ok as long as the company is all in your name and you have not had any business with the provider since 6th.

"If they are right, then a lot new start ups are in big trouble if they start up their limiteds after 6th April with one of these big contractor providers who specialise in advertsing PSCs, " Once again, nail on the head, exactly my fear!

What to do, at the moment I am thinking small local accoutant with little or no contractors. This legislation seems beyond mad to me if all this FUD does actually have some substance. I so want to believe it is all FUD but Bradley's link (http://www.hmrc.gov.uk/employment-status/current.htm) to me indicates that Giant are just saying what HMRC are saying. The question is who are the revenue talking about?

[Bluebird]

I think the bottom line is that HMRC want to catch as many It Contractors and make them pay PAYE as is possible.

If this piece of legislation does not do the trick, I'm sure there will be another one coming shortly.

Just like IR35 didn't do the job, so the 2007 Budget came along - what makes anyone think the gvt will give up until all IT contractors are paying PAYE regardless of how long they have been contracting and who has "ruined" their nice little business set up.

I feel the only way is for IT contractors to gain recognition as independant businesses - much like other one man bands...

[Bright Spark]

HMRC are saying ...

"In response to the legislation published at Budget, a number of providers are telling their clients that they (the providers) are not MSC providers, rather that they are accountants. They are therefore telling clients that their companies are not caught by the legislation.

Based on the advertising material seen, it is HMRC’s view that many of these organisations are MSC providers as defined in the new legislation. Whether or not the new tax rules apply will depend on the precise relationship between the MSC provider and the client company. "

So Giant's information doesn't seem to be wrong. The quesiton is who are the accountants/providers that they and are HMRC are talking about and what is it in the precise relationship that matters if you do deal with one of these companies?

my view is that as long as an 'accountant' doesn't
deposit money from agency/client to you company bank account, just
charges you a fixed fee for accountancy services ie not a percentage of
the invoiced amount. then they will NOT be regarded as an MSC provider.

obviously there are 'accountants' who think they can still be MSC's if they
can get a professional qualification, I think this is what HMRC is trying to block.

Giant just seems to be putting 'spin' on this to make you think
that anybody who is an 'accountant' or operating a 'one-man' ltd company is an MSC which I beleive is wrong.

[malvolio]

God knows we shouldn't expect clarity from the current bunch of incompetents that make up our Government, but the intention is to prevent exactly what some ex-MSCs are trying to do, to retain their client base by fiddling with definitions. If they just transferred everyone to umbrella status and let them work out their own escape plan, none of this argument would be necessary.And I am not going to waste too much sympathy on the 99% of MSC clients who took all the tax breaks under essentially false colours. They are the ones to blame for the continuing attacks on all contractors, even those with genuinely independent business models.

[Lewis]

I second this, Giant have lost out big time due to changes in legislation,
they know that they can't compete purely for accountancy services
with the likes of SJD, NW. The only thing they can do is create FUD and
hope some if it sticks!

HMRC are saying ...

"In response to the legislation published at Budget, a number of providers are telling their clients that they (the providers) are not MSC providers, rather that they are accountants. They are therefore telling clients that their companies are not caught by the legislation.

Based on the advertising material seen, it is HMRC’s view that many of these organisations are MSC providers as defined in the new legislation. Whether or not the new tax rules apply will depend on the precise relationship between the MSC provider and the client company. "

So Giant's information doesn't seem to be wrong. The quesiton is who are the accountants/providers that they and are HMRC are talking about and what is it in the precise relationship that matters if you do deal with one of these companies?

[Bright Spark]

I believe Giant is the chief promotor of Fear, Uncertainty and Doubt (FUD) in all of this.

Go back to the HMRC's briefing note issued on 30/03/07 - they are clear.

I second this, Giant have lost out big time due to changes in legislation,
they know that they can't compete purely for accountancy services
with the likes of SJD, NW. The only thing they can do is create FUD and
hope some if it sticks!

[malvolio]

Don't confuse employment with IR35. Despite the apparent similarities, they are not related to each other.

[Bradley]

What does this mean?

From HMRC website

http://www.hmrc.gov.uk/employment-status/current.htm

I think is what they think of as clarification - as clear as mud. What if you're outside IR35?

[cojak]

I believe Giant is the chief promotor of Fear, Uncertainty and Doubt (FUD) in all of this.

Go back to the HMRC's briefing note issued on 30/03/07 - they are clear.

Go Ltd. Get yourself a good accountant. Job done.

Or:

Get yourself a good accountant. Go Ltd. Job done.

I am not worried by this change. I am a Ltd business. My accountant is a chartered management accountant. I think that Giant is trying to shore up rapidly sliding profits - Giant is not talking to me (or about me). Giant is talking to the contractors who are looking at leaving them.

[Lewis]

Get yourself a good accountant.

Giant have done a new website this weekend. Their latest offering to the debate is ... John Chaplin, Tax Director, of KPMG says: "This is the end for companies specialising in promoting and facilitating tax-advantageous services to one-man limited companies, regardless of whether they are badged as ‘accountants’ or not." ... Clause 24 states: ‘The Term in a "professional capacity" means that professionally qualified persons [accountants] 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 [one man limited companies]."

So IMHO you need to find a good accountant who doesn't promote and facilitate PSCs (whatever that means exactly!)

[cojak]

Classic FUD.

Go Ltd. Get yourself a good accountant.

End of story.

[Robot]

I don't know if it's just me being dense but that seems a bit weird (and legally dubious). How is a contractor supposed to control whether his accountant decides to run a brolly as a sideline?

Good question and IMHO I think the contractors will have to carry out due diligence for themselves or the agencies (due to the transfer of debt provision) will run scared and decide they will only deal with contractors who are operating through (dare I say it) file-travel and giant with their HMR&C approved PAYE friendly umbrella scheme!

[chu]

chu


I believe all one person limited companies that provide their personal services are caught under the MSC legislation BUT providing your professional accountant is not ‘an MSC Provider’ then you are safe.

I think you will have to ask File-travel why they pulled out of the market. Although, I think Simon (SJD) has given a good description of why @ post 67.


Robot

Well that was my original point. In post 67 Simon said that filetravel would still be running the banking (having some control over the company, and hence acting as a MSC) - but this isn't how it was going to work at all. As you and Simon say now, it is the fact that they are providing MSC services to other contractors which seems to be the deciding factor here. I don't know if it's just me being dense but that seems a bit weird (and legally dubious). How is a contractor supposed to control whether his accountant decides to run a brolly as a sideline?