Summer 2007 Newsletter Content Reverse Charges Beyond The Grave Director's Two Hats IHT Plan Fails VAT And Cash Amnesty International An Inspector Calls Losing A Bet Caring Doctors TAAR Brush Made To Be Broken Flat VAT Safe Deposit Tax On Gas Working Late Composite Companies Excuses, Excuses

Composite Companies The rules known as "IR35" have been around for several years to catch people who - to use the Revenue's phrase - "disguise employment" by operating through a limited company. Instead of paying the lower rates of corporation tax and avoiding NIC by paying out dividends, IR35 will drag you back within PAYE and Class 1 NIC - if, taking away the personal service company, you would be an employee of the client, and a number of other conditions are met. One attempt to get around IR35 has been the establishment of "managed service companies". Someone running a composite company which acted as an "umbrella" for a large number of individual workers could get around the rules - up to the March Budget. New rules will effectively apply IR35 to MSCs from 6 April 2007. Some people have suggested that a new way around the rules is for an "accountant" to run the MSC - the new rules don't apply to accountants who provide services to clients. Some of those people who have been running MSCs up to now reckon that they can use this as a loophole. However, it seems likely that the Revenue will clamp down on that as well - they really aren't keen on this sort of tax planning. If you have been working through this sort of arrangement in the past, we will be happy to discuss with you the changes to the rules.