This has come up because a couple of weeks ago we had a poster ask us about an umbrella structure that we hadn’t heard of before.
Without going into too much detail, the ‘umbrella’ had, without his knowledge or consent, created a Limited company (with the contractor as Director) and was working a complicated chain that basically delayed payment of tax that he had to pay HMRC at a later date.
Now this was duplicitous, but not illegal as far as we could tell. BUT as one knowledgeable poster pointed, there might have been Managed Service Company/Provider implications in the arrangement (see here for more details on MSCs and MSCPs here:
MSC Legislation: what is it and why are HMRC using it now to nail contractors?
https://forums.contractoruk.com/acco...ntractors.html )
Why am I putting this here? Well, low and behold, today there is an article regarding HMRC vs a contractor who didn’t know that the Umbrella had made him a director of a Limited company.
HMRC won - ignorance or naivety is no excuse.
Directors, HMRC V Gradidge proves naivety is no excuse if MSC debts get transferred to you
https://www.contractoruk.com/managed..._msc_debts_get
So ALWAYS ask the Sales person if You will have a company set up AND check using Companies House to see if your new ‘umbrella’ has made you a Director of a Limited company.
And if you do have one, make the umbrella close it down and GET OUT!!!
(See? I told you we wouldn’t forget…)
Without going into too much detail, the ‘umbrella’ had, without his knowledge or consent, created a Limited company (with the contractor as Director) and was working a complicated chain that basically delayed payment of tax that he had to pay HMRC at a later date.
Now this was duplicitous, but not illegal as far as we could tell. BUT as one knowledgeable poster pointed, there might have been Managed Service Company/Provider implications in the arrangement (see here for more details on MSCs and MSCPs here:
MSC Legislation: what is it and why are HMRC using it now to nail contractors?
https://forums.contractoruk.com/acco...ntractors.html )
Why am I putting this here? Well, low and behold, today there is an article regarding HMRC vs a contractor who didn’t know that the Umbrella had made him a director of a Limited company.
HMRC won - ignorance or naivety is no excuse.
Directors, HMRC V Gradidge proves naivety is no excuse if MSC debts get transferred to you
https://www.contractoruk.com/managed..._msc_debts_get
In this case, the MSC liability had already been established on Mr Gradidge’s company, N19 Training Services Ltd, and the MSC Provider was Think Accounting Ltd (TAL) which subsequently became New Wave.
As HMRC had no reasonable prospect of recovering the monies from Mr Gradidge’s company, the tax authority issued a transfer or Debt Notice on Mr Gradidge, as director of the MSC, to pay the liability.
This appeal was a little unusual. Mr Gradidge contended that he was unaware that he was a director of the limited company, and in any event he was not a director at the time the debt transfer notice was issued.
As HMRC had no reasonable prospect of recovering the monies from Mr Gradidge’s company, the tax authority issued a transfer or Debt Notice on Mr Gradidge, as director of the MSC, to pay the liability.
This appeal was a little unusual. Mr Gradidge contended that he was unaware that he was a director of the limited company, and in any event he was not a director at the time the debt transfer notice was issued.
So ALWAYS ask the Sales person if You will have a company set up AND check using Companies House to see if your new ‘umbrella’ has made you a Director of a Limited company.
And if you do have one, make the umbrella close it down and GET OUT!!!
(See? I told you we wouldn’t forget…)
