Enforcement of MSC legislation introduced in 2007 has so far netted HMRC £6 million in additional revenues, Shout 99 reports.
The information, requested by contractor services organisation Professional Passport, reveals that the business models of 40 service company providers have now been assessed by HMRC for compliance with MSC legislation. As a result, the Revenue conducted formal reviews on 216 firms it believed to be Managed Service Companies under the legislation.
Although only one review took place in 2007/2008, the figure rose steeply in each successive year, reaching 47 in 2008/2009, 62 in 2009/2010 and 106 in 2011/2011. A total of £5,913,006 in tax revenue has been generated by the reviews.
Before the release of this data, there was little evidence in the public domain about the impact of the legislation or about the extent of compliance activity. Crawford Temple from Professional Passport said that, although all providers claim to be compliant, many legitimate umbrella companies operating on a PAYE basis doubted this was the case, and the figures appear to confirm that suspicion.
Moreover, the Revenue data also reveals that 142 formal transfer of debt notices were issued since MSC legalisation was implemented four years ago – all of them, in fact, in 2010/2011. On average, worker/shareholder debt transfers amounted to £2,610 per notice, while other parties amounted to £46,975 per notice.
The figures are good news for PAYE umbrella contractors, as non-compliant providers have cost them a good deal of money over the years.