|
Some MSC Providers stopped offering specialist services to freelancers working through their own limited companies, while other interested parties issued conflicting advice as to who would or would not be covered by the legislation.
With many of these companies or organisations having a commercial interest in the market place, it is difficult for the contractor - who also carries the financial risk if it's wrong - to make an informed decision.
Shout99 asked the Treasury to clarify some of the contentious areas.
Are individual companies affected?
One of the most disputed areas is whether a so-called 'Personal Service Company' or limited company is a viable option.
The Treasury confirmed that a genuine personal service company operating independently of MSC Providers is outside the legislation. This leaves those contractors operating in this manner free to choose an accountant (see below) to help them run their own businesses and/or purchase insurances.
Advertisement 
Another area where there has been disagreement is whether accountants are exempt or not.
The Treasury explained that accountants are exempt if they are merely providing accountancy services. But if an accountancy firm is in the businesses of promoting 'MSCs' it moves out of the 'merely providing accountancy services and comes into a different category' where the exemption does not apply. So, in certain circumstances and depending on the nature and activities of the accountancy firm, merely being an accountant does not bring automatic exemption.
Who's responsible for the debt?
The debt transfer provisions have been changed recently, so where does the 'buck stop'?
The Treasury said that any debts relating to tax and NIC are first and foremost the responsibility of the contractor as is the situation now and as will be the situation from April 6. When the Finance Bill receives Royal Assent, probably in July/August, HMRC can also pursue the MSC Provider and its directors if it cannot reclaim the money due from the contractor. From January 2008, other third parties, such as agents, can also be targeted.
What advise would the Treasury give contractors?
It is not usually the practise of the Treasury to give specifics of what is acceptable or unacceptable, or to advise contractors how to operate. However, they told Shout99: "People need to stick to the letter of the law and can talk to Revenue & Customs advice lines."
In summary
- Genuinely independent personal service companies or one-man limited companies are not covered by this legislation
- Some accountancy firms will be exempt and be able to continue offering services to contractors - others will not qualify for the exemption and will be classified as an MSC Provider depending on the nature and practices of their business.
- The contractor is responsible for the debt from April 6. The debt transfer rules will not apply until August 2007 and January 2008.
Further information
For more information about the MSC provisions and its effects on freelancers, see Shout99's 'Political News' section.
--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
-
Susie Hughes © Shout99 2007
|
