Pick your accountant carefully
Have you ever asked your accountant about Managed Service Company (MSC) rules?
After a very recent investigation, by HMRC, into contractors and their relationship with their accountants has resulted in one Accountancy firm being deemed a MSC provider.
What does this mean and how did it come about?
An MSC provider is an entity that controls, influences and determines the financial movement of a contractor’s limited company. Any contractor using an MSC is NOT entitled to take dividends and income is classed under paye income tax. You can imagine the shock if you receive a letter from HMRC stating you owe tax on all dividends taken from 2017!
What should you do to ensure this does not happen to you?
After HMRC’s success on this determination they will continue to look at accountants who live close to the MSC edge. Many ‘accountants’ moved from being contractor accounts to hybrid accountants offering accountancy and umbrella services, with the latter being controlled and influenced by the accountant. These hybrids are easy targets for HMRC, as it only takes one client to be deemed using an MSC for every client to be caught.
Make sure you engage a specialist accountant that focuses purely on tax planning and accountancy services and its abundantly clear the services they provide.
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