Reply to: Service Companies question in 2011 Personal Tax Assessment

[LisaContractorUmbrella]

I would hope, everybodys. However, given the track record of UK governments over the last 40 years, I wouldn't trust them to simplify a wheel barrow.

Yep think you're right there Fred. The trouble is that simplifying the tax system to the extent of introducing flat rate would put too many people out of work in both the public and private sectors; you would lose half of HMR&C [please insert opinion at will] but a lot of accountants would suffer as well, as would tax advisors, debt managers etc etc. Absolutely fantastic idea in theory but unlikely - the office of tax simplification's first publication was over 150 pages long so I can't see them going for 12% flat rate tax with no PA (besides that wouldn't be 'fair' )

[Fred Bloggs]

Ah but in whose interests would it be to simplify the tax system??

I would hope, everybodys. However, given the track record of UK governments over the last 40 years, I wouldn't trust them to simplify a wheel barrow.

[LisaContractorUmbrella]

Yet in a modern, sensible (much more flat) tax system there should be no need to have loopholes to exploit. Another agument, I know, but I am increasingly convinced that the UK taxation system is unfit for purpose.

Ah but in whose interests would it be to simplify the tax system??

[Fred Bloggs]

If they did that they would get rid of the tax loop holes that people like us use to our advantage.

Yet in a modern, sensible (much more flat) tax system there should be no need to have loopholes to exploit. Another agument, I know, but I am increasingly convinced that the UK taxation system is unfit for purpose.

[SueEllen]

Sorry, but as the UK tax system gets ever more convoluted (what ever happened to the Tories and the office of tax simplification???) more and more clarifications of clarifications will be required for evermore. Frankly, the entire system is now not fit for purpose and should be scrapped.

If they did that they would get rid of the tax loop holes that people like us use to our advantage.

[Fred Bloggs]

Sorry, but as the UK tax system gets ever more convoluted (what ever happened to the Tories and the office of tax simplification???) more and more clarifications of clarifications will be required for evermore. Frankly, the entire system is now not fit for purpose and should be scrapped.

[LisaContractorUmbrella]

Maybe someone should ask HMRC for a clarification of their clarifications. May as well send in a request for a clarification of the clarification of their clarifications at the same time, bound to need it.

Funnily enough we have just had that with the AWR legislation - that came out and we all read it, then they published guidance, then final guidance and then final, final guidance; makes you wonder why they can't just make it clear in the first place

[xoggoth]

Maybe someone should ask HMRC for a clarification of their clarifications. May as well send in a request for a clarification of the clarification of their clarifications at the same time, bound to need it.

[LisaContractorUmbrella]

As an IT consultant, I work on client sites on contracts that are arranged by a variety of intermediary recruitment agencies. They set up a contract between my one man band limited company and themselves. There is no contract between my company and the end client.

Hence, I am arguing that my contracts aren't providing services through a service company as there is no contract between the client and my company.

So, the involvement of an intermediary is crucial.

The MSC legislation is referring to an intermediary who would be arranging payment in some way rather than to an agency whose only responsibility is to find you a contract

[geoffreywhereveryoumaybe]

Contracting through an intermediary

But it is still B2B with the Ltd company being responsible for its own taxation - there is no other company involved i.e. an intermediary

As an IT consultant, I work on client sites on contracts that are arranged by a variety of intermediary recruitment agencies. They set up a contract between my one man band limited company and themselves. There is no contract between my company and the end client.

Hence, I am arguing that my contracts aren't providing services through a service company as there is no contract between the client and my company.

So, the involvement of an intermediary is crucial.

[LisaContractorUmbrella]

I'm not quite sure on the term intermediary in relation to MSC either, but if it was in point, then is it not your own company that fulfils that role. You are not providing your services personally to the client, you are supplying those services through your company.

But it is still B2B with the Ltd company being responsible for its own taxation - there is no other company involved i.e. an intermediary

[Taxless]

I don't think that a single person Ltd Co. can possibly be caught under the MSC legislation, even with the new definitions, simply because I cannot see how you would ever be termed an 'intermediary' - you will be personally supplying your services direct to the client. I think that HMR&C have expanded the scope of the legislation so that they can cover all the little rascals who have consulted 'leading QC's' in order that they can promise '90% take home pay'; there are many different types of schemes that have been set up and it would be impossible to legislate against all of them but the MSC legislation is all encompassing and has the added bonus of debt transfer which would usually be enough to make agencies run a mile.

I'm not quite sure on the term intermediary in relation to MSC either, but if it was in point, then is it not your own company that fulfils that role. You are not providing your services personally to the client, you are supplying those services through your company.

[THEPUMA]

I don't think that a single person Ltd Co. can possibly be caught under the MSC legislation, even with the new definitions, simply because I cannot see how you would ever be termed an 'intermediary' - you will be personally supplying your services direct to the client. I think that HMR&C have expanded the scope of the legislation so that they can cover all the little rascals who have consulted 'leading QC's' in order that they can promise '90% take home pay'; there are many different types of schemes that have been set up and it would be impossible to legislate against all of them but the MSC legislation is all encompassing and has the added bonus of debt transfer which would usually be enough to make agencies run a mile.

I can guarantee you that HMRC are currently investigating several single person ltd companies under the MSC legislation and I think it is likely that some unrepresented taxpayers will already have paid up.

What do you mean when you refer to an intermediary? In the MSC legislation, there are references to MSC providers (the accountant in laymen's terms) and MSCs but I don't recall any reference to an intermediary.

[LisaContractorUmbrella]

I don't think that a single person Ltd Co. can possibly be caught under the MSC legislation, even with the new definitions, simply because I cannot see how you would ever be termed an 'intermediary' - you will be personally supplying your services direct to the client. I think that HMR&C have expanded the scope of the legislation so that they can cover all the little rascals who have consulted 'leading QC's' in order that they can promise '90% take home pay'; there are many different types of schemes that have been set up and it would be impossible to legislate against all of them but the MSC legislation is all encompassing and has the added bonus of debt transfer which would usually be enough to make agencies run a mile.

[SueEllen]

Sorry SueEllen, but they don't seem to have one.

I have access to Lexis Nexis/Simon's Taxes in electronic format and a search of these very comprehensive products has failed to show anything.

That's what I suspected.

A mate of mine is considering setting up a limited and as she is a pedant* I was just confirming that there was no definition provided by HMRC.

*There is a good reason for this.