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MSCs: Two wrongs don't make a right
by Susie Hughes at 11:54 15/03/07 (Viewpoint)
The respected professional bodies, including the Institute of Chartered Accountants, have been united in their condemnation of the Government's approach to MSCs.
While supporting the general intentions of the measures, there is wide-spread feeling that it will miss its target and is too rushed for serious consideration.

These bodies were equally united and issued similar warnings seven years ago over the introduction of IR35.

It is the subsequent problems with the enforcement of IR35 which have led to the Government's intention to address this issue by introducing a new set of restrictive measures via the changes to MSCs.

IR35-watchers knew years ago that it was a badly drafted piece of legislation which would prove difficult to enforce for the Revenue and difficult to achieve certainty for freelancers and their advisers.

The Government now seems to have recognised that fact too - otherwise they would not be introducing a new measure to combat a failure which is already on their legislative books.

Will the Government listen this time?
There are no indications that there will be any U-turn or re-think in the light of the responses it has received to its consultation process.

The freelancing community should stand-by for another measure in the few years time to combat this failure when the I told you so penny drops.

You could almost write the script now.

In the next few months there will be a huge increase in the formation of limited companies, as freelancers are forced out of their MSCs into their own personal service companies.

How long before the new Chancellor starts talking about these new companies as 'tax motivated incorporation which needs to be stamped out'?

Further information
For more information about the Pre Budget Report, the MSC proposals and its effects on freelancers, see Shout99's 'Political News' section.

The Budget is scheduled for Wednesday, March 21 - Shout99 will be providing comprehensive coverage of the developments relating to freelancers and small businesses on the day - and subsequent reactions from experts.

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Susie Hughes Shout99 2007

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