Audit Standards for Service Providers Help Contractors
HMRC will provide an audit framework for service
providers to contractors. There had been rumours that
such a framework would be scrapped, but at a seminar
held by the Watford-based chartered accounting firm
JSA, which specialises in contractor affairs, HMRC
Employment Status Policy director Robin Wythes
confirmed that the audit standard would be published
within the next two months.
Better Advice, Better Relationships With Agents
Why should contractors care about audit standards for
service providers?
Contractors will enjoy better advice, and better
relationships with their agencies as HMRC provides
audit standards for service providers. Here's how it
works: under the current Managed Service Company
legislation, agencies are afraid to provide you with
advice about accountants and lawyers, because they
risk being held liable for your tax debts. If they
send you to a managed service company, they could wind
up being liable for your tax debt.
But Now They Can
So the idea came about that your accountants and
lawyers could be reviewed by auditors, to make sure
they couldn't be tarred with the managed service
company brush.
First, the Revenue was to do this audit. But the
Revenue doesn't have the personnel, nor can it
intervene in companies at this level, as Wythes
explains. So the idea evolved that the Revenue would
provide the standards governing an audit of this type,
and then it could be applied to given service
providers by third parties--the big four accounting
firms were obviously the ones who were to be the third
parties of choice, although the audit is not limited
to them--any competent firm can provide it.
So Some Jumped The Gun
A few service providers decided to jump the gun. They
did the audit with one of the big four audit firms
before HMRC developed an audit standard. ''The audit
without the standard does not seem to serve any clear
purpose,'' Wythes points out. ''It makes more sense
for service providers to wait until we provide the
standard.''
The audit standard will be published within two
months and doing the audit after that makes the most
sense
Robin Wythes-HMRC
What The Standard Will Provide
When the standard is published, and auditors, from
both the big four and the others, begin to check out
service providers, contractors will be able to consult
with these providers without fear of being involved in
a managed service company.
Because the whole point of the managed service
legislation was to keep contractors from working with
managed service companies. If you need to have a
limited company set up for you, or if you want to work
with an umbrella, you need to be sure that it is not
tainted under the legislation. Working with an audited
service provider means that you don't have to worry.
''This is important because we are still seeing
managed service company providers offering what they
call special deals to contractors,
us. ''There are still a lot of companies out there who
aren't compliant.''
With the audit standards we will achieve a kind of
stability
Barry Roback-JSA
Barry Roback, of JSA, has tirelessly supported the
resolution of this issue in the industry. ''It's clear
that now, with the audit standards coming into place,
we will achieve a kind of stability and contractors
will be able to make good choices.''
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