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Their lobbying efforts paid off to a certain degree as the Chancellor delayed the transfer of MSC debts to third parties until January 6 2008. However, he retained the general principle of the measure.
Ann Swain, Chief Executive of agency trade body, Association of Technology Staffing Companies (ATSCo), said: “ATSCo is disappointed that the debt transfer provisions remain a central plank of this legislation. Hopefully, HMRC will have a sense of fairness when pursuing debts and not just go after the deepest pockets simply because it’s easier.
“We are pleased the Treasury has taken on board our concerns at the speed at which this law was being brought in and deferred implementation of the debt transfer provisions until 2008."
Definition
One surprise in the Budget was the Chancellor's 11th hour change to the definition of MSCs, by broadening it to what seems like a 'catch-all'.
The final legislation is not yet available and will, no doubt, be the subject of intense scrutiny during the Parliamentary passage of the Bill - but in the meantime, service providers and those connected with them are left wondering how wide the net will be cast.
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According to ATSCo, the original consultation stated that contractors would be deemed to be operating through MSCs if third parties exercised ‘control’ over their ‘finances or general management’. The key test now is whether third parties are ‘involved with’ or ‘influence’ contractors, which is open to much wider interpretation.
ATSCo says that this could lead to PSCs being deemed MSCs and the debt transfer provisions of the legislation being triggered in unlikely ways.
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The Editor
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