Income Tax Self Assessment - New "investigate me" questions

[Dundeegeorge]

Result

So a service company is one caught by IR35. And IR35 only catches service companies. There's a nice symmetry there.

and since there's no such thing as a service company, IR35 is dead, long live IR36......

[NotAllThere]

So a service company is one caught by IR35. And IR35 only catches service companies. There's a nice symmetry there.

[Bigbird]

As others have said I doubt if any legal definition of a "service company" exists.

HMRC started using the term in 1998/99 when they started to prepare the legislation that subsequently became IR35. No idea if there is a legal definition of a service company (doesn't look like it) but HMRC say

Intermediaries such as service companies can be set up to provide the services of a single worker to a client in circumstances where, if it were not for the service company, the worker would be an employee of the client.

As ex-HMRC staff that's how I was taught to think of it...........

[Dundeegeorge]

Could you please point to the legal definition

Nope.

A service company is any company whose main trade is the provision of services of a person. This very definitely includes a Ltd company owned by one person where the bulk of that company's income is derived from that person providing themselves or their skills to an end-user. IIRC there is something in the actual definition about the relationship between person and end-user being one of employment if the 3rd party (service company) was not involved.

IMO ticking the box will not trigger an investigation per se but it will almost certainly trigger a status enquiry to examine your contracts for IR35 compliance. If any of your contracts fail, THEN you are likely to get a full investigation.

of a 'service' company, because it sounds like you're making it up.

[FarmerPalmer]

looks like the treasury have withdrawn it - perhaps they also found too many holes in the release - after they released it.

[malvolio]

Ignore them. SS are peddling snake oil to the uninformed.

On the P35, Q1 is "Do you work through a PSC?". Well no, actually, because such a beast doesn't legally exist and is not defined; I work for a UK-registered limited company.

Q2 is then irrelevant.

[Ivor1]

Anyone know anymore about these questions on the tax return ?

Myself and a few colleagues have all been contacted by 'Sunday Solutions' today (dont know how they got my number ggrrr), and what the effectively said is there will be questions about whether we work through a PSC and how much divs we took compared to salary, then finished with the line 'but we can offer you this to get round it'. Obviously looking for business but is what they are saying about the tax return questions actually true, by ticking this box are we saying 'come and get me' ?

Cheers

[srennocks]

The MSC doco doesn't give the exact wording of the question that'll be asked... I very much doubt it would just say 'service company' because that is just too generic and would end up with far too many ticks for them to deal with. Would assume the question will be made specific to the MSC legislation, but they need to be careful not to encapsulate into it people doing PAYE via umbrellas.

[Bluebird]

So, basically all contractors working through Ltd companies should be prepared for a status enquiry (I guess they should anyway but this seems to re-inforce it!).

wouldn't this cover employees of any "Service" Companies - which is a whole load of permanent employees. ?

[VectraMan]

I notice it doesn't say anything about you being the owner or director of the company. Which means people who are employees of large consultancies are going to have to tick that box too.

[Lewis]

Nope.

A service company is any company whose main trade is the provision of services of a person. This very definitely includes a Ltd company owned by one person where the bulk of that company's income is derived from that person providing themselves or their skills to an end-user. IIRC there is something in the actual definition about the relationship between person and end-user being one of employment if the 3rd party (service company) was not involved.

IMO ticking the box will not trigger an investigation per se but it will almost certainly trigger a status enquiry to examine your contracts for IR35 compliance. If any of your contracts fail, THEN you are likely to get a full investigation.

So, basically all contractors working through Ltd companies should be prepared for a status enquiry (I guess they should anyway but this seems to re-inforce it!).

[Bigbird]

Msc

Nope.

A service company is any company whose main trade is the provision of services of a person. This very definitely includes a Ltd company owned by one person where the bulk of that company's income is derived from that person providing themselves or their skills to an end-user. IIRC there is something in the actual definition about the relationship between person and end-user being one of employment if the 3rd party (service company) was not involved.

IMO ticking the box will not trigger an investigation per se but it will almost certainly trigger a status enquiry to examine your contracts for IR35 compliance. If any of your contracts fail, THEN you are likely to get a full investigation.

[PAG]

Msc

[Lewis]

Just read article on Shout99 but I don't follow the answer ...

http://www.shout99.com/contractors/s...le.pl?id=42647

"From one of the govt's MSC documents, a new question will be added to tax self assessment forms - will this effectively say "investigate me" ?
http://www.hm-treasury.gov.uk./media...panies_453.pdf
"4.29 Two additional questions will also be asked on the Income Tax Self Assessment
(ITSA) return asking if any income (of whatever nature) in the return is derived from the
taxpayer’s provision of their services via a service company and, if so, the amount.
These changes will be introduced to the ITSA return form for 2007-08."

By 'Service Company' do they mean any Ltd company or MSCs?