On 6th January the new MSC legislation concerning the transfer of debts, came into force. The government believes that it is losing around 350m a year by employees paying less than they ought to. This new law gives the Inland Revenue the power to recover unpaid taxes from agencies that have either encouraged or have been actively involved with an MSC. Obviously this is a major concern for any agencies who have either directly or indirectly been involved with MSCís in the past.
The legislation which became law in April 2007 resulted in the closure of current Composite and Managed Personal Service Company Schemes, such as those run by Nova, Sterling and Gabom. The legislation is already having a huge impact on agencies and in time will impact on clients. Both could become liable for unpaid tax and National Insurance. In many cases this change in the law is causing considerable confusion within the industry.
As the UKís leading independent consultant, de Poel liaises with over 750 agencies each week, facilitating the placement of over 20,000 staff each week. The company constantly strives to assist their recruitment agencies and recently established an in-house legal department who monitor and advise on new and forthcoming legislation.
In a bid to help agencies tackle this recent problem de Poel has identified a viable solution, appointing Employment Management Company ESENTUAL as their recommended partner. ESENTUAL offer a fully HMRC compliant and easily implemented alternative to the recently prohibited schemes.
ESENTUAL are an Employment Management Company operating a PAYE Umbrella. ESENTUAL pay their workers PAYE only and make all statutory contributions including employersí national insurance. It is clearly stated in HMRCís own July 2007 MSC Guidance document, that PAYE Umbrellas fall outside of MSC Legislation.
The ESENTUAL solution is of benefit to all parties. Workers are able to increase their PAYE take home pay whilst agencies are free from the threat of fines and back taxes under the debt transfer element of the new legislation.
.ESENTUAL is a Barclays Corporate Banking Customer. Barclays commented ìWe are delighted to be supporting the team at ESENTUAL. The payroll services sector is highly competitive and ESENTUAL have proved that it is a fast growing, successful company with an impressive and market-leading proposition to contractors. ESENTUAL has built an enviable client base and we are pleased to have the opportunity to continue to support them and build on our partnership in 2008 and beyondî.
de Poel provide ESENTUAL solution to tackle new MSC legislation
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