HMRC assault on MSCs

It is reported in the Financial Times and elsewhere that HMRC have recently issued assessments to clients of what might be described as ‘accountants specialising in solutions for contractors’.   Tens of thousands of taxpayers are said to be involved and the aggregate tax at stake is likely to be in the hundreds of millions.

These assessments are issued on the basis that under the arrangements the contractors fall to be treated as Managed Service Companies (‘MSCs’).

If a personal service company is simply provided with the sort of legal or accountancy services that lawyers and accountants normally provide, in the way that lawyers and accountants normally provide it, it is unlikely to be an MSC.

If, on the other hand, the accountant (or other service provider) crosses over the line to being ‘involved with the company’, the MSC legislation (and in particular, the bit of it that can make all sorts of people liable for tax) comes into play.  Broadly, ‘involved with the company’ can be paraphrased as ‘managing the company on behalf of the owner’: but the drafting of the legislation is worryingly wide, and it seems that HMRC may now be seeking to push the boundaries somewhat further than has hitherto been considered apt.  For an explanation of what ‘involved with the company’ means, take a look at our commentary from 2018 on Christianuyi Ltd and others, the first (and so far only) case to have progressed to the Tribunal.

If you receive a tax assessment invoking the MSC legislation, the first port of call (after appealing the assessment, of course) is probably the service provider who is alleged to be ‘involved’ with the company.  Such a service provider (being one of the people who is potentially on the hook for the tax liability) is likely to take a keen interest in resolving the matter with HMRC.  But if that is not possible (if the adviser is no longer in business, for example) or if you would like independent advice, please get in touch with your usual BKL contact or use our enquiry form.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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