Welcome to IPSE’S Managed Service Company Hub, where you will find everything you need to know about the MSC legislation and how it might affect your business. We’ve put the hub together in light of recent HMRC activity in this area.
The 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. IPSE is helping a handful of 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 can IPSE support you?
IPSE members will receive a template appeal letter, outlining that you disagree with the determination notice and that you fall outside of the scope of the MSC legislation.
Members can 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 Plus 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.
Template: MSC Appeal Letter
If you get a Regulation 80 determination notice, you need to lodge your appeal within 30 days. If you do not appeal within the deadline, you run the risk of accepting the liability.
IPSE’s strategic tax partners Markel have drafted a template appeal letter which is exclusively available to IPSE Freelancer and Director members, for free.Login Become a member
Advice on the appeal process from Markel
Appeals must be lodged with HMRC within 30 days of the date of the determination, which may be a protective determination or a final determination.
IPSE’s strategic tax partners Markel have supplied advice on the appeal process which is exclusively available to IPSE Freelancer and Director members, for free.Login Become a member
Are you protected against a tax investigation?
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 to £100k.Find out more
Your questions answered
IR35 one year on and Managed Service Companies: Your questions answered
Recorded on 21/04/2022
12 months since the changes to off-payroll legislation in April 2021, navigating IR35 still remains a minefield for contractors. On top of this, there are concerns over managed service company legislation.Login Become a member
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