MSC Legislation – Further Guidance

HMRC issues further guidance in relation to the MSC legislation

As part of its ongoing monitoring of events related to the MSC
legislation HMRC has identified areas where it feels additional
clarification would be required, in particular to address certain
misleading information. This further guidance can be found at

It is important to note that HMRC emphasises that contractors genuinely
in business on their own account are not intended to be subject to the
MSC legislation, and therefore pose no risk to an employment business.
However it is not clear what HMRC means by the words ” in business on
their own account” since there are no established tests to determine
this, and the use of these words is a departure from the usual test that
is applied which is based upon deemed employment status within an
assignment. Could this statement be creating more questions than

HMRC has also today (18th September 2007) announced that it is
considering an audit standard to enable Managed Service Companies to be
more easily recognised. No standard has been issued and indeed the
principle of whether there will be a standard at all has not yet been
decided upon. The statement is no doubt intended to calm employment
businesses that are worried about the lack of clear tests, but again
raises more questions than answers.

The link to the latest announcement is at

For more information on this issue, and to get to the heart of this matter readers may wish to attend Lawspeed’s unique seminar and Q&A event on 11th October 2007 which will be attended by HMRC.