HMRC publish Spotlight 32: “Managed Service Company legislation”

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Have you been put firmly in the frame by a third party agent or employer?

HMRC have published Spotlight 32: “Managed Service Company legislation – tax avoidance schemes involving unpaid PAYE and Class 1 National Insurance contributions”. Spotlight schemes are generally those about which HMRC think there is the greatest need to warn potential users.

In Christianuyi Ltd ; Ors v HMRC, HMRC successfully argued that the managed service companies (MSC) legislation applied to arrangements established and run by a third party. Where a company is set up to provide a worker’s services to an engager and the MSC legislation applies, amounts paid to an MSC for those services that are not already subject to PAYE income tax and Class 1 National Insurance Contributions (for example, share dividends), are treated as employment income.

HMRC say they continue to open enquiries into users of similar arrangements that include the provision of workers in many different industry sectors, including road haulage, health, care and education. They will challenge these arrangements via every route open to them, including litigation. The taxpayers in the Christianuyi case have been given permission to appeal.

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