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HMRC issues further guidance in relation to the MSC legislation
As part of its ongoing monitoring of events related to the MSC legislation HMRC has identified areas where it feels additional clarification would be required, in particular to address certain misleading information. This further guidance can be found at http://www.hmrc.gov.uk/employment-status/monitoring-legislation.htm.
It is important to note that HMRC emphasises that contractors genuinely in business on their own account are not intended to be subject to the MSC legislation, and therefore pose no risk to an employment business. However it is not clear what HMRC means by the words " in business on their own account" since there are no established tests to determine this, and the use of these words is a departure from the usual test that is applied which is based upon deemed employment status within an assignment. Could this statement be creating more questions than answers?
HMRC has also today (18th September 2007) announced that it is considering an audit standard to enable Managed Service Companies to be more easily recognised. No standard has been issued and indeed the principle of whether there will be a standard at all has not yet been decided upon. The statement is no doubt intended to calm employment businesses that are worried about the lack of clear tests, but again raises more questions than answers.
The link to the latest announcement is at http://www.hmrc.gov.uk/employment-status/current.htm
For more information on this issue, and to get to the heart of this matter readers may wish to attend Lawspeed's unique seminar and Q&A event on 11th October 2007 which will be attended by HMRC.
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