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In Christianuyi Limited & Others v HMRC [2018] UKUT10  the Upper Tribunal agreed that a Managed Service Company (MSC) Provider was ‘involved’ with the taxpayers' personal service companies and was subject to the MSC rules.

Upholding the 2016 decision of First Tier Tribunal (FTT) it is expected that the resulting tax bill will run to several million pounds.

S61B ITEPA 2003 sets out the meaning of a “managed service company” with s61B(2)(a) – (e),detailing the requirements for an MSC provider to be involved with the personal service company.

The FTT held that CBS:

The taxpayers appealed to the UT on ten grounds including:

The Upper Tribunal in dismissing the appeal found:

Comment:

Despite the UTT wanting to set a precedent for future cases the decision did not get very far in considering the judicial interpretation of the MSC rules. They would not be drawn into debating whether, for example, a payroll services provider might fall within the rules, and as the legal and accounting exemption was not sought this was also not discussed. It is therefore largely a decision on the facts only.

Links

Christianuyi Limited & Others v HMRC [2018] UKUT10  

Christianuyi Limited & Others v HMRC [2016] TC05045

Our subscriber guides: IR35 and Managed Service Companies.

 


 

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