MSC Legislation Update

Following the publication of the draft Finance Bill in March 07 there has been considerable speculation concerning the meaning of some of the definitions. In particular, the section that excludes organisations that provide accountancy and legal advice allows interpretation that facilitates the suggestion that some service providers to contractors can continue as usual. Does it or doesn’t it? In our opinion, if this definition is allowed to remain as currently drafted there is likely to be litigation between HMRC and those service providers that do not pay contractors purely by way of employment. The stakes are clearly high for both sides. If HMRC were to lose the floodgates would once again be open. If HMRC were to win the service provider and the contractors concerned would face a substantial bill. One conclusion from the above may be that HMRC will not attack any organisation that is relying upon the accountancy…