MSC Legislation poses a very real threat to agencies
The announcement in the press that a recruitment agency and its directors are being pursued for £10 Million by HMRC under the Managed Service Companies (“MSC”) legislation acts as a stark warning that by working with companies falling within the scope of this legislation, agencies are exposing themselves to significant financial and reputational risk.
The MSC legislation allows for tax debt to transfer to other companies “involved” with the MSC (e.g. umbrella companies or PSCs) if the MSC does not properly account for tax. When the MSC legislation came into force in 2007 there was a great fear that it would prevent agencies from working with umbrellas and limited companies. This has not turned out to be the case, but agencies need to ensure that they are not being complacent with this legislation and that they are taking active steps to minimise any risks. In addition, agencies should ensure that they are not simply accepting an umbrella’s own confirmation that this legislation does not apply, and that they are obtaining independent advice from external bodies.
Lawspeed has been running a Service Provider Audit (“SPA”) scheme since 2008 in which service providers such as umbrella companies undergo an audit to ensure that agencies can be aware of the risk they pose. This scheme is provided free of charge to recruitment companies with the costs being borne by the service providers.
If you would like further information on the SPA Scheme, the MSC legislation or would like to ascertain if your umbrella companies have been audited please contact Lawspeed on 01273 236 236 or follow the link below.
Click here to request your free SPA report now
Adrian, a highly experienced lawyer, founded Lawspeed in 1997. He is responsible for developing our extensive portfolio of products and services, including the widely used Lawspeed contract templates. Adrian is an expert on “recruitment law” and specialises in contracts, regulatory compliance, employment status and dispute handling. He is chair of the trade body the Association of Recruitment Consultancies, the only lawyer lead recruitment trade body in the UK. Adrian and his co-director Ravi devised Standards in Recruitment as a vehicle for helping drive up standards and compliance in the industry.
Adrian is our lead in discussions with the government over regulatory evolution. Apart from assisting with client support, Adrian’s primary role is research and development into methods of business delivery, our latest service Proterms being his most recent project. Adrian heads our IR35 lawyers team.