MSC enforcement brings in £6 million
Compliance activity by HM Revenue and Customs relating to the enforcement of the Managed Service Company Legislation has now raised close to £6 million according to contractor services group, Professional Passport.
Crawford Temple Following the introduction of The Managed Service Company Legislation in 2007, there has been little evidence to suggest any compliance activity or detailed factual information about its impact.
Professional Passport, who also carries out compliance checks for providers, made a request to HMRC and now understands that HMRC have considered the business model of 40 service company providers to determine whether they are Managed Service Company Providers, as defined in the MSC legislation.
These provider reviews have resulted in 216 formal reviews of companies considered by HMRC to be Managed Service Companies.
Activity
Professional Passport has reported that the figures also reveal that compliance activity in this area is increasing at a sharp rate with the following reviews carried out in each tax year:
- 2007/2008 - 1
- 2008/2009 - 47
- 2009/2010 - 62
- 2010/2011 - 106
These reviews have yielded almost £6 million of additional tax revenues:
- 2007/2008 - Nil
- 2008/2009 - £2,468,000
- 2009/2010 - £2,070,006
- 2010/2011 - £1,375,000
Crawford Temple of Professional Passport, who is also on UKTECH's 'Ask An Expert' panel said: "Every provider claims to be compliant, what we know, and have known for many years, is that this simply is not the case - these figures now support our beliefs and claims."
Debt notices
The figures also show that 142 formal transfer of debt notices have been issued since the implementation of the MSC legislation; all of these being issued in 2010/2011.
The average amount of MSC debt transferred per notice was:
- Worker/Shareholder - £2,610
- Other parties - £46,975
Julian Ball, Legal Director of PayStream said: "It is encouraging that HMRC has taken action against non-compliant providers who have cost contractors a lot of money. We have recently seen a shift by agencies towards PSLs to protect themselves and their contractors from exactly these type of risks."