Managed service company status confirmed

Christanuyi Ltd and several other companies were set up by Costelloe Business Services Ltd. Each company paid Costelloe for its services which included providing a registered office dealing with the invoicing to the client by the company for the fees charged for the individual’s services paying the individual a salary and dealing with PAYE drawing up and filing annual company accounts and annual returns and arranging for the company’s tax return to be submitted and corporation tax paid.

Each company negotiated its own contracts with the end clients and Costelloe did not have a controlling or supervisory role. HMRC said Costelloe was a managed service company (MSC) provider within the meaning of ITEPA 2003 s 61B. The taxpayers appealed.

The First-tier and Upper Tribunals dismissed their appeals.

The Court of Appeal agreed with the lower tribunals. Lady Justice Rose said Costelloe was precisely the kind of business...