The Recruitment and Employment Confederation (REC) have recently advised all
members that they have been successful in their ongoing negotiations with HMRC
in relation to the transfer of tax liabilities to third parties, including employment
businesses.
It has now been agreed that an employment business operating in a normal manner
will not be caught under the definition of an MSC provider and therefore, if
a contractor was investigated and found guilty of underpaying taxes, the employment
business would not be liable for any shortfalls (should the contractor and/or
MSC be unable to pay). In initial proposals they would have been under all circumstances.
The legislation does however still apply, and the tax deficit can still be
imposed on employment businesses, in the event they refer a contractor, or receive
commissions or any other form of financial recompense, from an MSC, or any organisation
investigated and found to be an MSC. Inspired Recruitment does not do, and has
never previously, utilised, recommended or received payments from any such organisation.
Inspired Recruitment still advises all contract workers who are unsure of their
position to seek professional advice in relation to this matter rather than
taking any risks which could render them liable for underpayments in taxes.
If any contractor chooses to utilise the services of a third party company
or similar the onus is on them to ensure they are paying the relevant taxes
and that that company does not fall foul of the new legislation.
As such Inspired Recruitment are asking all new contractors, who are not working
for their own Limited company and wishing to use any third party services, to
complete the MSC form (sent in the contractors start pack or available
here) and return it to us in order for us to assess, as best we can,
whether that company may or may not be considered an MSC and to indemnify us
against any subsequent claims that may arise in the event the company is found
to be an MSC and tax shortfalls arise as a result of this.
The contractor uses the services of third party organisations entirely at their
own risk, even if the organisation appears not to be an MSC at first, and acknowledge
that Inspired Recruitment will not be responsible, or knowingly accept, to offer
them an assignment if they choose to work via what we perceive to be a Managed
Service Company, and we will not be liable for any subsequent claims made by
HMRC for tax shortfalls in the event the candidate is investigated and found
guilty of tax avoidance or using an MSC.
Inspired Recruitment will try to assist where we can in relation to this matter
and have a strong desire to protect, not only our own interests but those of
our contractors, although again we cannot stress enough that any contractor
unsure of their position or requiring further information should contact the
HMRC or seek professional advice prior to entering into any assignment and utilising
the services of organisations they feel could be deemed to be an MSC.
