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Leading contractor accountant confirmed as "not caught" by MSC legislation

Published on Jan 10, 2008 |

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One of the UK's leading contractor accountancy firms, SJD Accountancy, says it has become the first accountancy company to be confirmed by KPMG as not being caught by the controversial Managed Service Company legislation.

A Managed Service Company (MSC) is, in the simplest terms, one which literally takes over the running of a contractor's or freelancer's limited company. By grouping contractors together and offering a 'managed service' scheme, numerous tax laws can be bypassed, including IR35. A number of MSCs sprang up a few years ago when the owners of these companies realised the potential benefits but the practice has never been condoned by professional accountancy bodies and has always been viewed as an attempt to take advantage of HMRC tax loopholes.

Last year the Government closed this loophole, effectively ruling out the use of Managed Service Companies and affecting more than 200,000 contractors in the process, as well as placing uncertainty in the minds of recruitment
companies. If these recruiters were found to have recommended working practices which were later deemed to contravene the new legislation, then they could potentially become liable for any contractors' back taxes, penalties or
debts.

SJD say they are the only such firm in the country to be reviewed and found to be compliant.

MD Simon Dolan said:

"I am delighted that both SJD's and ContractorUmbrella's businesses have received KPMG's accreditation. I feel sure that a very large burden will be lifted from recruiters who are looking to recommend bona fide accountancy firms and for contractors who are looking for a safe pair of hands to manage their tax affairs."