Managed service companies

Managed service companies

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Have always wondered and never found a clear answer: are professionally regulated ICAEW/ACCA firms exempt from being MSC providers? I am happy with all the other rules around involvement, etc, but this professional exemption thing has stumped me for years and made me wonder do regulated firms get a special exemption or not?

The HMRC guidance (http://www.hmrc.gov.uk/manuals/esmmanual/ESM3515.htm) says:

"The legislation provides a specific exemption for persons being MSC Providers (involved with a company) merely by virtue of providing legal or accountant services in a professional capacity. This specific exemption applies only to persons professionally qualified (or training for a professional qualification) regulated by a regulatory body."

But further on it says:

"An accountancy/tax advisor, whether or not professionally qualified, who provides advice to clients who are service companies is not a MSC Provider merely by virtue of their client base. The test is whether a person is carrying on a business (or a discernable part of their business) of promoting or facilitating the use of companies to provide the services of individuals."

So the question is

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By Montrose
06th Apr 2016 13:44

The nature of the accountancy practice is the distinction

Merely giving advice as part of the business of an accountant/tax adviser does not ipso facto make the adviser an MSC provider.

Separately a qualified adviser whose only business is advising sub contractors in relation to their tax affairs is exempted .

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By mikewhit
06th Apr 2016 15:35

Prior to the MSC rule, there were companies (akin to umbrella companies) that provided these companies as a means for eg. freelance workers to have the benefits of working via a limited company without the requirement to run the Ltd Co side in terms of admin, payroll, VAT, Companies House etc., or having to be a director.

This was a useful service in that it relieved the workers of the above "burdens", yes, but it also helped ensure HMRC got its due taxes in a correct and compliant manner.

It also provided a route for disqualified directors still being able to work freelance/"interim" via a LtdCo without infringing disqualification.

In my (humble) opinion, the Govt shot itself in the foot with this rule, by pushing the above-mentioned classes of people out of a well-defined and compliant mode of working.

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