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HMRC internal manual

Decisions and appeals for National Insurance Contributions and Statutory Payments

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Notices of decision: Wording of decisions relating to managed service companies

DANSP02250, DANSP02300 and DANSP25750 provide guidance about the legislation that allows decisions to be made relating to managed service companies (MSCs). See DANSP25800 for guidance about decisions regarding the transfer of debts.

The example below applies the legislative requirements and general principles described in DANSP29200 and DANSP29300.

Example

Conditions are met so that HMRC can treat

* DF Ltd, a MSC, as making to Michael Potts, a payment or benefit which is to be treated as earnings from an employed earner’s employment; and
* Michael Potts as receiving a payment or benefit which is to be treated as earnings from an employed earner’s employment
  
No Class 1 National Insurance contributions (NICs) have been paid. Class 1 NICs are due on the amounts treated as earnings from an employed earner’s employment.
  
Michael Potts was paid cash and benefits from the MSC. All payments and/or benefits were received by Michael Potts.
  
The MSC provided Michael Potts’ services to their client ABC Ltd.
  
Wording of decision
  
My decision is that:
  
DF Ltd provided Michael Potts’ services during the period from 1 May 2008 to 30 September 2009.
  
Michael Potts received payments and/or benefits from DF Ltd in respect of the services provided by DF Ltd during the period from 1 May 2008 to 30 September 2009.
  
The payment and/or benefits Michael Potts received in respect of his services provided by DF Ltd in the period from 1 May 2008 to 30 September 2009 are not earnings derived from employed earner’s employment with DF Ltd.
  
DF Ltd is liable to pay primary and secondary Class 1 contributions for the period from 1 May 2008 to 30 September 2009 in respect of the payments and/or benefits Michael Potts received.
  
The amount DF Ltd is liable to pay in respect of those payments and/or benefits is £15,356.98.
  
The amount DF Ltd has paid in respect of those payments and/or benefits is £0.00.

 Notices of decision

In this example, the DAA1(A) will go to DF Ltd and the DAA1(B) will go to Michael Potts.

### Payments and/or benefits paid to an associate of the worker

If payments and/or benefits are paid to an associate of the worker the decision should show they were paid to the associate. So, in the above example, if DF Ltd made all payments and/or benefits to Michael Potts’ wife the decision should read

My decision is that:
  
DF Ltd provided Michael Potts’ services during the period from 1 May 2008 to 30 September 2009.
  
Michael Potts’ wife, Josie Potts, received payments and/or benefits from DF Ltd in respect of the services provided by DF Ltd during the period from 1 May 2008 to 30 September 2009.
  
The payment and/or benefits Michael Potts’ wife, Josie Potts, received in respect of Michael Potts’ services provided by DF Ltd in the period from 1 May 2008 to 30 September 2009 are not earnings derived from employed earner’s employment with DF Ltd.
  
DF Ltd is liable to pay primary and secondary Class 1 contributions for the period from 1 May 2008 to 30 September 2009 in respect of the payments and/or benefits Michael Potts’ wife received.
  
The amount DF Ltd is liable to pay in respect of those payments and/or benefits is £15,356.98.
  
The amount DF Ltd has paid in respect of those payments and/or benefits is £0.00.
  
Notices of decision
  
In this example, the DAA1(A) should be issued to DF Ltd and the DAA1(B) should be issued to Michael Potts. Michael Potts’ wife, Josie Potts is named in the decision but a DAA1(B) should not be issued as she is unaffected by the decision.

### Decision needed for more than one worker

Where a decision is needed for more than one employee see DANSP41000.

### Covering letter

See DANSP43500 about what you should include in a covering letter.