02 October 2007

Brookson welcomes the HMRC’s proposal to explore the possibility of publishing an Audit Standard.

Potentially, this would mean that certain external bodies applying the Standard would be able to determine whether a service provider’s business model would or would not result in client companies being Managed Service Companies.

Martin Hesketh, managing director of Brookson, comments “This is a very positive move for the industry. Brookson has always supported the Government’s attempts to ensure that service providers are acting responsibly and compliantly. The HMRC published guidance notes, released in July this year, which was a positive step towards addressing some of the confusion that remains within the industry after the Budget announcement. However, service providers and agencies must be proactive in ensuring they are operating within the legislation.

“All providers of accountancy or umbrella services must undertake a diligent and rigorous review of all the legislation and guidance relevant to the contractor market to ensure compliance. Contractors must take time to both understand the issues and how their service provider addresses these issues.

“Should HMRC bring in an Audit Standard, it could provide an independent, objective view of a business’ compliance from a recognised third party. With the right process in place, such an audit could provide the desired clarity for all involved; service providers, contractors and recruitment agencies. It could be a very effective mechanism for preventing service providers from falling into a non-compliant trap, protecting contractors and effectively removing any transfer of debt risk for recruitment agencies. That said, there is clearly quite some work for HMRC to do before such a process is close to being implemented.

”A key concern for contractors wishing to run their own business with help from companies such as Brookson is the new Managed Service Company legislation. Following a diligent and rigorous review of the legislation and guidance, Brookson has fundamentally changed the services it provides and the way in which it provides them to ensure compliance.

Having undertaken the review, Brookson is confident that the accountancy and related services it can provide to individual limited companies does not result in those companies being MSCs."

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