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MANAGED SERVICE LEGISLATION
After months of speculation and after limited consultation, today's Budget has finally clarified the future of Managed Service Companies. The 2007 Finance Bill - which will put into law today's Budget announcements - will, as anticipated, introduce legislation to finally render them obsolete.Despite representations from the professional tax & accountancy bodies, the scope of the legislation has in fact been WIDENED further than originally proposed. Whereas the original proposals focused on the characteristics of the schemes (i.e. Composite Companies), the forthcoming legislation now puts the spotlight on the scheme provider and will encompass ALL limited company solutions that they provide, including Personal Service Companies.
However professional accountants and lawyers are expressly exempted from the forthcoming legislation. In addition and also as anticipated, the Government has decided to delay the implementation of the Debt Transfer Provisions associated with this legislation as it relates to agencies and end user clients until January 2008. Furthermore, the legislation will only apply to those agencies and end users that influence or control the finances of individuals.
The 2007 Finance Bill, which will include the proposed Managed Service legislation, will not be published for several months and regrettably therefore some uncertainty will remain until then.
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