Tax and VAT investigation cover
If your tax affairs are investigated by HMRC, IPSE will provide you with a team of experts who can take this off your plate, and financial cover for legal fees up
What is it?
The Managed Service Company (MSC) legislation was implemented in 2007. It was designed to stop contractors being formed into groups and operating through companies, of which they had little or no involvement. Instead an MSC Provider (MSCP) would run the company. The legislation ensured that employment tax and National Insurance would apply where the company was in fact an MSC. The legislation was seen by many, including HMRC, as being effective. It shut down the MSCPs, the avoidance stopped and managed service companies were rarely mentioned again.
Fast forward to today and HMRC is looking again at the MSC legislation, but seeking to apply it much more broadly. Two specialist accountancy service providers have been targeted. HMRC has taken the view they are MSCPs and has written to their customers saying they are MSCs. It feels like an attack on a whole sector and indeed it is quite possible that HMRC will expand its investigations beyond just those two accountants.
It remains to be seen where the current enquiries will end up, but we hope common sense will prevail – using an accountant doesn’t mean you’re not an independent business, making decisions on behalf of the company. We are currently helping many members caught up in this and we will help any and all members who might come under the glare of a future MSC investigation.
How does it work?
In the case of MSC legislation, a Regulation 80 notice of determination letter would be sent to your company to inform you that your accountancy services provider has been determined as a MSCP and that your company is now deemed a MSC. HMRC would then outline their determination of unpaid PAYE income tax and National Insurance due by your company for the affected tax year.
If you receive a Regulation 80 notice from HMRC, as a Freelancer or Director member you can access a template appeal letter, outlining that you disagree with the determination notice and that you fall outside of the scope of the MSC legislation.
Freelancer and Director members can also contact [email protected] on receipt of a determination letter and we can support you with advice, regular Q&A sessions with all affected members and information about how your membership will protect you from the next steps of HMRC’s enquires.
In addition to the insurance position for all IPSE members, IPSE Freelancer and Director members will also benefit from the tax investigations service if HMRC request documents under HMRC’s information gathering powers from your company prior to an assessment being raised. The tax helplines for all members offers advice for this matter and any other tax or legal enquiry.
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