The MSC rules are intended to prevent an individual from securing a tax advantage by providing their services to end clients through an intermediary (eg, a company). A number of conditions must be met for a company to be treated as an MSC, including that an MSC provider is involved with the company. 

HMRC has used its latest Spotlight to raise awareness of the MSC rules. The Spotlight provides guidance on the meaning of “MSC” and “MSC provider”, gives an example and sets out the following features of a common MSC product: 

• advertisements, for example, internet ‘pop-ups’, promise to maximise the person’s take-home pay;
• marketing encourages the person to work using a company and become a shareholder, taking a small salary and receiving dividends;
• services are standardised and are not tailored to the person’s circumstances;
• fees are variable, going up when the person is working and down when they are not; and
• software, which usually includes suggestive navigation, directs the person to the most tax advantageous result. 

In its Spotlight, HMRC draws a distinction between a “traditional accountant” and an MSC provider. HMRC says that the traditional accountant reviews the person's circumstances and working practices to present them with “appropriate compliant options”. In contrast, an MSC provider "specifically promotes or facilitates the use of one corporate structure to all its customers”.  

HMRC says that “individuals and businesses using traditional bespoke tax advisory or accountancy services only, for example, the provision of dedicated bookkeeping software, are not within the scope of the Managed Service Companies legislation”. 

The MSC provider rules are also considered in two recent TAXline articles, available to ICAEW Tax Faculty members. The first explains how the rules work and the second looks in details at the circumstances in which an accountant could be considered an MSC provider. Membership of the Tax Faculty is open to everyone, and free for ICAEW members.