Will HM Revenue & Customs (HMRC's) views on which companies are Managed Service Companies increase the risk to Employment Businesses having debts transferred to them?
HMRC will continue to apply its guidance and policy in terms of whether a debt would be transferred to an employment business/agency. That is, there would have to be evidence of active involvement by the Employment Business/Agency in the workers' provision of their services through a Managed Service Company (MSC) (see paragraph 4.2 of the MSC Guidance).
Will the fact that many of the Service Providers are overseas increase the risk that HMRC will look to employment businesses, as the parties with greater assets, to transfer debts?
No. Employment businesses should bear in mind that HMRC will only consider transferring debts to an employment business both if debts are irrecoverable from Service Provider or workers, and there is evidence that the employment business was actively involved in the provision of the workers' services through an MSC.
Should employment businesses refuse to make payments to a workseeker's company if it is outside the UK?
Whom an employment business chooses to pay or not to pay is ultimately for the employment business to decide based on commercial considerations and statutory obligations.
What if the Service Company Provider or the workseeker provide written assurance that the workseeker's company is not an MSC?
Some Service Company Providers are providing service companies which HMRC consider to be MSCs but which the Service Providers claim are not. Simply obtaining an assurance from a Service Provider or workseeker would not guarantee that HMRC would not consider transferring an MSC's debts to a statutorily prescribed third party. However, whether HMRC would consider transferring an MSC's debts specifically to an employment business would be decided in accordance with our current guidance (see paragraph 4.2 of the MSC Guidance.)
Can Employment Businesses continue to pay Umbrella Companies without fear of transfer of debt?
HMRC is aware of at least one company calling itself an 'Umbrella Company' where workers' income is not being treated as employment income. Employment businesses should therefore not simply rely on the term 'Umbrella Company' but should seek assurance that the company treats all of their workers' income as employment income.
How can a contactor or employment business decide whether an intermediary being paid is a nominee of the sub-contractor?
As payer you must make sufficient enquiries to satisfy yourself as to the true nature of the intermediary you are paying. Where payment is to a nominee, both nominee and worker must be registered with HMRC for gross payment status in order for you to make payments gross.
