Reply to: My ex-MSC provider

[ASB]

It is your obligation to fill in a self assessment tax return if you have income which takes you into the higher rate tax bracket.

It's a bit wider than that. You are required to fill one in if you are sent one (generally directors or people who have previously completed one) or you have untaxed income.

This pretty much boils down to being a higher rate payer and having dividend income or savings income.

Other common categories will be anybody who has rental income and (in my personal view) anybody who has claimed any unreceipted expenses since they should be treated as income (read the hmrc guidance and the sticky).

Also one may want to fill in a return to claim releif on additional things such as business calls, mileage reimbursed at < 40/25p - essentially anything which was not claimed as an expense from an employer.

[Hex]

a. MSC providers closed their business before April : ex-MSC users DO NOT need to fill self assessment tax return and have any tax liabilities

Filling in a self assessment tax return is not conditional at all on the status of your MSC and when they did or didn't close their business.

A self assessment tax return is for personal tax and not related to your MSC in any way, other than they paid you some of the income that you need to put on the return.

It is your obligation to fill in a self assessment tax return if you have income which takes you into the higher rate tax bracket. It is not an excuse to say you weren't sent one - they obligation is on you to ask for one if you are not sent one.

[cartlidgea]

What I am saying is correct to the best of my knowledge. But you should try and help yourself a bit. Qdos told me it is valid till 2009. Why not find out for yourself. Phone them up to check - 01455 852030.

With regards to self assesment you MUST speak to Gaint - 0870 125 8692.

I say again .... If your dividends and salary where more than £33K (before tax) you MUST fill in a self assesment tax return - failure to pay your higher rate tax is tax evasion and you can get into big trouble. The local tax man must not have understood your situation or you earnt less than £33K last year. As you have not said your salary I assume you have gone into the higher rate tax bracket as most contractors through Giants ex-MSC do. The date has NOT passed for the last tax year as it only ended a few weeks ago! And you don't get an automatic fine as you have failed to declare income. You will get your fine later when they discover this out.

You NEED to speak to someone about this I recommend Giant as they paid you or your new accountant.

Hi Lewis thanks for your help you are right with the qdos statement, as for self assessment my annual salary was £39k so I was worried but minus expenses etc I sneeked in just under 31K so hopefully I dont have to worry anymore

Thanks Mate

[clwd]

Having read all the replies from you guys, it seems like that there are two categories for MSC providers. Please correct me if I am wrong.

a. MSC providers closed their business before April : ex-MSC users DO NOT need to fill self assessment tax return and have any tax liabilities
b. MSC providers continue their business with new legislation rules: ex-MSC users need to fill self assessment tax return

Actually, I am getting confused whether I should need to complete a self assessment tax return although my ex-MSC closed down in March. In fact, I haven't recieved any self-assessment form. My concern is that I earned more than 33K during 2006-7. In addition, I haven’t got any IR35 insurance.

However, I have joined PCG standard membership once my new Ltd company was registered in companies house at the end of March. Unfortunately, I am still unable to trade because my business bank account from “CATER ALLEN” is STILL being processing.

[Lewis]

Thanks Lewis this is very helpful.

Are you sure about being covered til 2009? Other contractors posting about Giant say the insurance is now invalid?

I didnt fill in a self assessment and my local taxman said I wouldnt need to, if this was wrong wouldnt I have had a fine by now hasnt the date passed?

When you say earnt over 33K does that mean 33k before tax is removed or after and is this minus your tax free allowance everyone gets?

Thanks

What I am saying is correct to the best of my knowledge. But you should try and help yourself a bit. Qdos told me it is valid till 2009. Why not find out for yourself. Phone them up to check - 01455 852030.

With regards to self assesment you MUST speak to Gaint - 0870 125 8692.

I say again .... If your dividends and salary where more than £33K (before tax) you MUST fill in a self assesment tax return - failure to pay your higher rate tax is tax evasion and you can get into big trouble. The local tax man must not have understood your situation or you earnt less than £33K last year. As you have not said your salary I assume you have gone into the higher rate tax bracket as most contractors through Giants ex-MSC do. The date has NOT passed for the last tax year as it only ended a few weeks ago! And you don't get an automatic fine as you have failed to declare income. You will get your fine later when they discover this out.

You NEED to speak to someone about this I recommend Giant as they paid you or your new accountant.

[cartlidgea]

Thanks Lewis this is very helpful.

Are you sure about being covered til 2009? Other contractors posting about Giant say the insurance is now invalid?

I didnt fill in a self assessment and my local taxman said I wouldnt need to, if this was wrong wouldnt I have had a fine by now hasnt the date passed?

When you say earnt over 33K does that mean 33k before tax is removed or after and is this minus your tax free allowance everyone gets?

Thanks

[Lewis]

What self assessment I asked Inland Revenue if I had to fill in a self assessment and they said no I was classed as PAYE when using Giant MSC.

So the IR35 cover you get only covers you while it is in place..what a load of c$!p when you join an umbrella/msc and they say you will be totally covered by IR35 insurance for the whole time you have worked with us you expect that working time to be covered even if that one year was investigated three years later!!

As for Giant I dont think as msc employees we were classed as being directors but we were given £1 shares that we claimed dividends from so not sure now how this leaves us all.

As for PCG looks like good cover but I prefer the cover of Qdos which pays all the extra taxs etc if you get caught out. Im starting to think that £380 a year for 6 years to cover myself versus the money I could lose if they charge me for all of the msc errors etc is cheap in comparison

You have got yourself VERY confused.

(1) You almost certainly must fill in a self assessment tax return at the end of the year because of your dividend income from Giant. You will have to pay additional tax on any dividends that take you into the higher rate tax bracket. Giant do tell you this. Call Giant and they will explain. You should have kept money aside to pay this. If you look at the bottom of every one of your Giant payslips it will say "Higher rate tax payers (taxable income above £33,300 in current tax year) may be liable for additional tax on dividends received".

(2) Your IR35 insurance with Giant is valid until 2009. You have NO need to worry about IR35 and your time at Giant for a number of reasons. As well as the insurance being in place to protect the company, you were not a director and so not liable anyway. The MSC legislation is separate from IR35. Giant shut down their MSCs before the tax year so you cannot be caught by that. Speak to QDOS if you like they will put your mind at rest.

(3) Giant were very bad with regards to expenses. They said no receipts needed and encouraged everyone to claim the max daily allowance. Yes if investigated and you have no receipts then those expenses may be disallowed. But it's unlikely you will be investigated and even if they are discounted it's not that big a deal to pay a small amount of extra tax. It's nothing like being caught by IR35.

You can stop worrying about Giant. But you must complete a self assessment tax return if you have earnt more than £33K.

[cartlidgea]

Am I over worried about this there must be loads of people in the same position is it worth me paying out £400 for full tax cover or am I worrying about nothing

[cartlidgea]

What self assessment I asked Inland Revenue if I had to fill in a self assessment and they said no I was classed as PAYE when using Giant MSC.

So the IR35 cover you get only covers you while it is in place..what a load of c$!p when you join an umbrella/msc and they say you will be totally covered by IR35 insurance for the whole time you have worked with us you expect that working time to be covered even if that one year was investigated three years later!!

As for Giant I dont think as msc employees we were classed as being directors but we were given £1 shares that we claimed dividends from so not sure now how this leaves us all.

As for PCG looks like good cover but I prefer the cover of Qdos which pays all the extra taxs etc if you get caught out. Im starting to think that £380 a year for 6 years to cover myself versus the money I could lose if they charge me for all of the msc errors etc is cheap in comparison

[mjshrimpton]

I am still majorly worried about this. I have spent so much time lately worrying about whether to go limited or not that I never gave a second thought to my old msc.

I am concerned that firstly for the first 7 months they allowed me to claim expenses without receipts the rest I supplied receipts for but secondly they stated I was outside IR35.

Was anyone else with Giant im sure I remember them having a good insurance policy for us, including IR35 cover built in am I imaging this?

Is the taxman really likely to come after all contractors that used mscs for proof of being outside IR35? Would they try and claim the money back if you couldnt prove you were outside? What about expenses as an msc would they be liable? I dont want to have to take out tax/ni cover for the next six years!!!

Email QDOS - they supplied the policy - you will get the same answer I got above when I asked about extending the cover.

Join the PCG and get their insurance cover as well as loads of other benefits (who do I sound like now???)

Yes they might want to see receipts if you get an enquiry into your self-assessment, so if you can't provide them, you may have to pay some extra tax.

[cartlidgea]

I am still majorly worried about this. I have spent so much time lately worrying about whether to go limited or not that I never gave a second thought to my old msc.

I am concerned that firstly for the first 7 months they allowed me to claim expenses without receipts the rest I supplied receipts for but secondly they stated I was outside IR35.

Was anyone else with Giant im sure I remember them having a good insurance policy for us, including IR35 cover built in am I imaging this?

Is the taxman really likely to come after all contractors that used mscs for proof of being outside IR35? Would they try and claim the money back if you couldnt prove you were outside? What about expenses as an msc would they be liable? I dont want to have to take out tax/ni cover for the next six years!!!

[mjshrimpton]

Do you mean a self assesment tax return or some other tax return. If your new Ltd was registered for PAYE before 5th April it will have some forms to file but if you setup in April it probably won't need to file anything for 2006/07. You personally however will need to complete a self assesment tax return.

With reagrds to (1). Who was you MSC? Did you have any IR35 insurance thrown in? If so, no need to worry about that. The only additional tax to pay is on dividends that put you into higher rate tax.

As I understand from talking to QDOS, once the company is closed that is it, and any structure designed to support an MSC will be going through the process of being closed down as soon as is practical.

The PAYE/NIC part of an IR35 investigation is a matter first for the company, and then the directors of the company personally to resolve, and you won't have been a director.

And although there is provision to clawback unpaid PAYE and NIC from employees if it cant be clawed back from an employer, a chartered accountant I was communicating with said he cant recall this ever being used.

So it is a minimal risk of an ex-MSC user being done under IR35, and there has been mention on here of the fact that HMRC had no way of extracting money from cases where MSC users had contracts which failed under IR35.

[Lewis]

3. Do I need to complete a tax return to Inland Revenue for 2006-07 even though I was an employee of the MSC?

Do you mean a self assesment tax return or some other tax return. If your new Ltd was registered for PAYE before 5th April it will have some forms to file but if you setup in April it probably won't need to file anything for 2006/07. You personally however will need to complete a self assesment tax return.

With reagrds to (1). Who was you MSC? Did you have any IR35 insurance thrown in? If so, no need to worry about that. The only additional tax to pay is on dividends that put you into higher rate tax.

[clwd]

I am confused why you are using "employee of" and "MSC" in the same sentance. Was the Msc running your company which you were the director of? Or were you an employee of an umbrella paying full paye and tax?

Sockpuppet, thanks for your quick response!

I was employed by my ex-MSC and later decided to setup my new ltd company because of the new legislation in March.

1. My contract is outside IR35 but I am still concerned over the working practice at my client site
2. I will chase my ex-MSC provider if they can send me P60.
3. I did receive a dividend with the MSC

[Sockpuppet]

I have been contracting for 15 months and was previously an employee of an MSC provider. After my ex-MSC provider closed down in the wake this years MSC Tax legislation, I setup a ltd company for myself in April. I am a beginner at operating a ltd company and still worried about some of the tax liability from my ex-MSC. Could someone clarify the following issues for me as I am concerned taxman may chase me for further Tax payments for up to six years back?

1. Do I need to be concerned with any tax liabilities of my last 15 months income while I was using my ex-MSC?
2. Should I receive any documents from my ex-MSC provider although they have already closed down? Ie P60 for 2006-07
3. Do I need to complete a tax return to Inland Revenue for 2006-07 even though I was an employee of the MSC?

1. Yes, depends on IR35 status etc..
2. Yes, by law they have to give you a P60 by May 19th this year.
3. Depends. Did you recieve divs etc or just standard PAYE. Were you a director.

I am confused why you are using "employee of" and "MSC" in the same sentance. Was the Msc running your company which you were the director of? Or were you an employee of an umbrella paying full paye and tax?