Empowering the Freelance Economy

Contractors blindsided by MSC tax charges

HMRC has issued letters to thousands of contractors, demanding up to £50,000 from them. The tax office is arguing that contractors have breached the MSC legislation – this is despite HMRC not having established all of the facts, says Seb Maley, CEO of IR35 Specialist and insurer, Qdos.

“Following IR35 reform and the Loan Charge, this is yet another short-sighted and unfair attack on the contracting workforce. It’s also one that poses a considerable threat to contractors and contractor accountants, as I explained to the Financial Times,” he said in a LinkedIn post.

At the moment, if HMRC categorises a firm as an MSC provider it deems all its clients as users of an MSC and levies PAYE and national insurance on any income earned by the contractors’ businesses, said the FT report.

Maley explains in this video what an MSC is and what it could mean for freelancers should they be considered caught in a tax avoidance scheme.

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