Business non-compliance could be taxing

Businesses in Britain and Northern Ireland could lose millions and face tax investigations if they do not comply with new Managed Service Companies (MSCs) legislation, Global Compliance Limited warns.

With the new laws due for Royal Assent in the UK Parliament this August, every payment received by businesses which use MSCs as mediators will be subject to PAYE and national insurance (NI) contributions.

A breach of the new law would mean that contractors would be forced to pay unpaid tax and NI in gross, which would be backdated to April 6th. A further penalty fee would also be added to the bill, not to mention the damage done to a company's reputation.

It is vital that third party organisations that do business through MSCs visit their solicitors to find out what the new regulations will require of them.

Director and founder of Global Compliance, Sarah Morrissey, said: "As of August 2007, new legislation will empower HM Revenue and Customs (HMRC) to claim unpaid NI contributions from contractors and MSCs, in addition to tax."

She added: "From January 2008, in the instance that the debt cannot be recovered from the contractor or the MSC, HMRC will look to pass the debt on to their agency and then to their client. Recruitment agencies, the banking, finance, legal and IT sector and all businesses that employ contractors and MSCs, have only a few months to comply.

"I strongly advise businesses to educate themselves on this legislation, as it could potentially cost a lot more than money."

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