Last month there was a new and potentially major development regarding the notoriously complex managed service company (MSC) legislation.
HMRC took the view that at least 1 000 limited company contractors breached the MSC rules issuing letters which demanded – in some cases – up to £50 000 in tax (that related to just one tax year) for supposed non-compliance.
When it comes to breaking the MSC rules irrespective of whether the contractor was encouraged to operate in this manner – by an accountant or other third party – it will be the contractor who is held liable initially at least. Even so when gathering evidence during an enquiry HMRC will certainly involve the provider. This is something we are witnessing right now.
Having already opened at least two enquiries involving specialist contractor accountants whom it suspects of being managed...
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