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ESM3630 | Managed Service Companies (MSC): Roles and Responsibilities

From HM Revenue & Customs · Employment Status Manual

General

In the majority of cases it is expected that an MSC’s debt will be identified as a direct result of compliance activity by compliance teams. In such cases the compliance team will assume responsibility for steps 1 to 8 at ESM3635 below and also liaise closely with the designated appeals office and Debt Management as appropriate.

Where an MSC’s debt is identified other than through compliance activity, it is for the relevant part of DMB to consider steps 2 to 8 in ESM3635 below.

Debt Transfer Team

The designated team is responsible for the following actions and is ultimately responsible for ensuring that any Transfer Notices issued fully comply with the requirements of section 688A, Part 11 ITEPA and associated Regulations. Under no circumstances should any of the following actions be delegated to/assumed by another team:

  • Review of referrals for consideration of a transfer of debt

  • Liaison with the referring office regarding any issues arising from the referral

  • The making of a Direction under Regulation 97C(2)/Regulation 29C(2) authorising recovery of the specified amount from a person within s688A(2)

  • Formally certifying that it is impracticable to recover the specified amount from a person within section 688A(2)(a) and (b)/(d) ITEPA 2003;

  • The timeous issue of a Transfer Notice or Notices in accordance with Regulation 97D/29D.

Employment Status & Intermediaries Team (ES&I)

The ES&I team will be responsible for the following:

  • Receipt of any appeal against a Transfer Notice and referral of the appeal to IPD NICs Technical team; and

  • Withdrawal of Transfer Notices.

In all cases where a debt is identified as a result of compliance activity, the ES&I team is responsible for:

  • Ensuring that the Regulation 80 Determination/section 8 decision is final and conclusive (that is, either the appeal period has expired or any appeal has been resolved);

  • Application to the MSC for payment

  • Ascertaining whether the MSC has the ability to pay the debt

  • Ascertaining the names and addresses of the parties to whom a debt may be transferred in accordance with section 688A, Part 11, ITEPA

  • Ascertaining the financial position of the parties to whom a debt may be transferred

  • Formally determining that in an opinion of an officer of HMRC, in accordance with Regulation 97C(1)(b) /Regulation 29C(1)(b), the debt is irrecoverable within a reasonable period from the MSC

  • Where appropriate, providing evidence to the designated Debt Transfer team that the specified amount is impracticable to recover from any person within section 688A(2)(a) or (b)/(d) ITEPA 2003

  • Submitting papers to the designated Debt Transfer team to include full debt details:

  • Under which condition in accordance with Regulation 97B/Regulation 29B

  • An analysis of the PAYE and NICs, by month and year (e.g. months 9 to 12 of tax year 2007 to 2008); and

  • Additionally, undertaking limited research in non-compliance cases regarding persons to whom a debt might be transferred, and their financial position.

Note: The ES&I team should undertake research (using, where appropriate, existing statutory powers and commercial processes available) regarding potential transferees during any appeal process in order that once the debt is confirmed there is no delay in seeking settlement/referring for consideration of a transfer of debt.

Debt Management Banking

DMB have two distinct roles:

i) Where a debt arises by virtue of Condition B, C or D of Regulation 97B/Regulation 29B, Debt Management offices (in liaison with Processing colleagues) are responsible for Steps 2 to 8 in ESM3635 below.

ii) For processing/enforcement of specified amounts, specifically:

  • Processing payment of a specified amount

  • Calculating the interest due on the specified amount and obtaining payment

  • Issuing a reminder to a transferee/transferees where a specified amount remains unpaid after 30 days from the issue of a Transfer Notice/Transfer Notices

  • Commencing legal proceedings for recovery of the specified amount from all transferees

  • Considering acceptance of a sum from a Transferee of less than that specified in the Transfer Notice - See ESM3635: step 12 “Receipt of Payment(s). This should be done in conjunction with the ES&I team

  • Repaying any excess payments timeously in accordance with Regulation 97L/Regulation 29L

  • Notifying the Debt Transfer team timeously where recovery of a specified amount from a person within section 688A(2)a) or (b)/(d) has proved impracticable; and

  • Notifying the ES&I team (where the case emanated from compliance activity) or the transferee’s Tax Office of the sum paid in settlement and that such a sum is not an allowable deduction.

Designated Appeals Team

Appeals against a Transfer Notice will be heard by the First Tier Tribunal. The ES&I team will receive consider all appeals against Transfer Notices and liaise with IPD NICs Technical team who will then liaise with Solicitors Office as appropriate.

The allocated Appeal team is responsible for:

  • Listing the appeal/appeals

  • Defending the appeal/appeals; and

  • Continued liaison with ES&I/IPD NICs Technical team on any technical/procedural issues.