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| HMRC seek recovery of PAYE from MSCs |
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A series of regulations have been published, which support the Government's initiative to tackle avoidance of income tax and NICs through the use of managed service companies (MSCs). In December 2006 the Government published a Consultation Document entitled Tackling Managed Service Companies, which covered the perceived problem of workers seeking to avoid employed levels of income tax and National Insurance Contributions (NICs) by providing their services through Managed Service Companies (MSCs), so enabling employment income to be drawn as dividends. The Consultation Document highlighted the fact that where HMRC had successfully taken action against such companies using ITEPA 2003, Chapter 8, they invariably had been unable to recover the resultant PAYE and NICs because such companies have no assets.A further Consultation Document entitled Managed Service Companies Transfer of PAYE and National Insurance contributions, was published in February 2007 which made clear that in addition to legislation to ensure MSCs operate PAYE (and Class 1 NICs), legislation would be introduced to ensure that should such companies fail to pay the resultant PAYE (and NICs) due, debts could be transferred to certain persons. These are either persons directly involved with the company, or persons who have encouraged the use of the company or who have been actively involved in the worker’s provision of their services through the company. The Regulations now published do not create PAYE debts. Debts will continue to arise by virtue of one of the existing provisions within the Income Tax (Pay as You Earn) Regulations 2003. The regulations are:
Related News Government launches MSC consultation Spring Budget 2007: summary of taxation provisions Links
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About The Author  Sarah Laing Sarah is a Chartered Tax Adviser. She has been writing professionally since joining CCH Editions in 1998 as a Senior Technical Editor, contributing to a range of highly regarded publications including the British Tax Reporter, Taxes - The Weekly Tax News, the Red & Green legislation volumes, Hardman's, International Tax Agreements and many others. She became Publishing Manager for the tax and accounting portfolio in 2001 and later went on to help run CCH Seminars (including ABG Courses and Conferences). Sarah originally worked for the Inland Revenue in Newbury and Swindon Tax Offices, before moving out into practice in 1991. She has worked for both small and Big 5 firms. She now works as a freelance author providing technical writing services for the tax and accountancy profession. |
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Article Added Tuesday, 24 July 2007 | 699 Hits |
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