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HMRC have published an interesting article on their views on the legality of “Pay day by pay day tax relief models”.

I’d confess I’d never heard of them. Its obviously cutting edge attempts at tax minimisation by Umbrella and Managed Service Companies (MSCs).

Not surprisingly given HMRCs take no prisoners stance on these sectors, HMRC disagree with the legal analysis and believe the schemes fail.

As a background, the report may be of interest to our clients using PSCs, as it helps you understand some of the offerings and spin by MSC providers, and why we don’t run MSCs ourselves.

The issues on expenses mentioned in the report don’t apply to PSCs as the model is different – your business is paying the expenses. As to the NMW issues, guidance from Government / HMRC is NMW does not apply to company directors unless there is a contract of employment.

HMRCs article is here: