Compliance

If you’re in the temporary worker sector, legislation effective from 6 April 2007 influences the decisions you make about your business. The law is in force to tackle disguised employment through Managed Service Company (MSC) schemes. It’s also designed to combat the tax-avoiding, risk-taking practices of non-compliant companies and individuals who ignored IR35 legislation and paid themselves dividends regardless. This legislation concerns anyone and everyone associated with one-man limited companies (PSCs) – that’s all directors, shareholders, agents and service providers.

what’s the big deal?
We’re not in the business of scaremongering but we do need to be clear: from 6 April 2007, liability for infringements can be passed ‘along the chain’ to third parties. If you run a limited company with the help of a service provider, you can be personally liable. HMRC can pursue you, your service provider, the agency and the end client too. You could be the one who has to pay – literally – for other people’s risks. The consequences include paying back the tax and NI you thought you’d saved, as well as interest. Multiply this by all the other contractors registered with the same service provider – it’s easy to see that implicated businesses face professional and financial ruin. The risks are not worth it for anyone!