Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.

Call us on 01457 860 285

Lomas and company - chartered accountants - advisors to business

Request a Callback

  • Book a Free Consultation
  • Get a Fixed Quote
Take our Monthly Poll
Your Business Size

Find out how to Make more, Keep more and Work less


HMRC update guidance on MSCs

Newsletter issue - May 2018.

HMRC have updated their guidance, following the recent decision in Christianuyi Ltd v R & C Commrs [2018] UKUT 10 (TCC), in which the Upper Tribunal ruled that a number of companies were operating as managed service companies (MSCs).

In this case, the Upper Tribunal upheld the decision of the First-tier Tribunal that the appellant companies were MSCs within the scope of the MSC legislation, and subsequently that the individuals were liable for PAYE income tax and National Insurance contributions (NICs) on the dividends they received from the appellant companies.

HMRC's view

Where a company is set up to provide a worker's services to an engager and the MSC legislation applies, amounts paid to an MSC for those services that are not already subject to PAYE income tax and Class 1 NICs (for example, share dividends), are treated as employment income.

HMRC's firm view, now supported by the tribunal decision, has always been that these types of arrangements do not work.

HMRC continue to open enquiries into users of similar arrangements that include the provision of workers in many different industry sectors, including road haulage, healthcare and education.

HMRC state that they will investigate and challenge these arrangements through every route open to it (including litigation) and seek full settlement of the tax due, plus interest and penalties where appropriate.

In particular, they have stated that they expect those using the same or similar arrangements to pay the tax and NICs they owe following 'this emphatic win for HMRC'. Further guidance on the MSC legislation and the Christianuyi case, can be found in HMRC's Spotlight 32.