HMRC debt transfer actions already proving successful
20 May 2013
HM Revenue & Customs (HMRC) says it has already successfully recovered debts due to it after it invoked powers to transfer debt under managed service company (MSC) legislation.
Mon, 20 May 2013HM Revenue & Customs (HMRC) says it has already successfully recovered debts due to it after it invoked powers to transfer debt under managed service company (MSC) legislation.
As Recruiter reported on Friday, HMRC has turned up the heat in its battle against tax and National Insurance Contributions (NICs) avoidance within the staffing sector.
HMRC tells Recruiter: “There has already been a return to the Exchequer.” However, it continues: “As some cases are subject to appeal, it is not possible to say how much has been or is still to be collected.” It adds that HMRC has a dedicated compliance unit, which enforces MSC legislation.
HMRC refuses to say to whom it has issued the 1,113 debt transfer notices to date since 2010, citing potential breaches of taxpayer confidentiality. However, a spokesperson tells Recruiter: “Where the PAYE and NICs debts of a managed service company cannot be recovered from the company, HMRC may transfer the debt personally to the company’s director, the MSC provider or other third parties.”
MSC legislation aims to tackle structures through which workers provide their services, where HMRC believes workers are not in business on their own account and where the nature of the contracts in which they are involved is one of employment rather than self-employment.
HMRC believes that some companies (referred to in the legislation as MSC providers) are using the MSC model “as a mechanism of avoidance” by setting up schemes aimed at maximising contractors’ take-home pay.
Frances Lewis, head of Osborne Clarke’s recruitment team, tells Recruiter that HMRC wouldn’t be using the MSC legislation in this way unless there was a MSC provider involved, usually a third party company or LLP. “That’s how it works,” she says.
Derek Kelly, managing director of umbrella firm Parasol Group, welcomes HMRC’s actions. Kelly tells Recruiter: “I think it is great they are using the powers they have got.” However, he says he would like to see HMRC giving more publicity to its enforcement activities, arguing that this would this increase deterrence.
Martin Hesketh, managing director of contractor accountants Brookson, is also supportive: “If they are starting to drive some of the behaviour they wanted to drive with this legislation, it has got to be welcomed,” he tells Recruiter.
Matthew Huddleston, chief financial officer at umbrella company FPS Group, says he expects that HMRC will step up its activity further. He tells Recruiter: “I expect we will see both the number of debt transfers and the size of debt transfers rise, as HMRC gets its teeth into this.”
As Recruiter reported on Friday, HMRC has turned up the heat in its battle against tax and National Insurance Contributions (NICs) avoidance within the staffing sector.
HMRC tells Recruiter: “There has already been a return to the Exchequer.” However, it continues: “As some cases are subject to appeal, it is not possible to say how much has been or is still to be collected.” It adds that HMRC has a dedicated compliance unit, which enforces MSC legislation.
HMRC refuses to say to whom it has issued the 1,113 debt transfer notices to date since 2010, citing potential breaches of taxpayer confidentiality. However, a spokesperson tells Recruiter: “Where the PAYE and NICs debts of a managed service company cannot be recovered from the company, HMRC may transfer the debt personally to the company’s director, the MSC provider or other third parties.”
MSC legislation aims to tackle structures through which workers provide their services, where HMRC believes workers are not in business on their own account and where the nature of the contracts in which they are involved is one of employment rather than self-employment.
HMRC believes that some companies (referred to in the legislation as MSC providers) are using the MSC model “as a mechanism of avoidance” by setting up schemes aimed at maximising contractors’ take-home pay.
Frances Lewis, head of Osborne Clarke’s recruitment team, tells Recruiter that HMRC wouldn’t be using the MSC legislation in this way unless there was a MSC provider involved, usually a third party company or LLP. “That’s how it works,” she says.
Derek Kelly, managing director of umbrella firm Parasol Group, welcomes HMRC’s actions. Kelly tells Recruiter: “I think it is great they are using the powers they have got.” However, he says he would like to see HMRC giving more publicity to its enforcement activities, arguing that this would this increase deterrence.
Martin Hesketh, managing director of contractor accountants Brookson, is also supportive: “If they are starting to drive some of the behaviour they wanted to drive with this legislation, it has got to be welcomed,” he tells Recruiter.
Matthew Huddleston, chief financial officer at umbrella company FPS Group, says he expects that HMRC will step up its activity further. He tells Recruiter: “I expect we will see both the number of debt transfers and the size of debt transfers rise, as HMRC gets its teeth into this.”
