Finance Act 2007 - Provisions start to come into force

View the previous news item for Budget 2007

The Finance Bill 2007 received Royal Assent on 19 July and is now the Finance Act 2007.

The following provisions of the Act come into force from the dates indicated:

Section 25 and Schedule 3 of the Act are effective from 6 April 2007. They require income tax under PAYE to be deducted from payments made to employees of Managed Service Companies (MSCs).
The corresponding liability for Class 1 NICs has to be introduced by Regulations and the new Social Security Contributions (Managed Service Companies) Regulations 2007 come into force on 6 August 2007, the start of the first tax month after 19 July. The earnings liable for Class 1 NICs are the same as those liable for PAYE tax and include the value of benefits provided in addition to payments. The amount liable for NICs is aggregated with any other earnings for NICs paid in the earnings period. The MSC is the secondary contributor.
Additions are made to the Income Tax (Pay As You Earn) Regulations 2003 and the Social Security (Contributions) Regulations 2001 to allow the PAYE and NICs debts of MSCs to be transferred to other persons and to define the rules relating to such transfers.
Section 108 provides HMRC with new powers to enquire into cases of suspected non-compliance by promoters of tax avoidance schemes and to enforce compliance in certain cases. The measures are in force from 19 July. Time limits for complying with these obligations are set out in the Tax Avoidance Schemes (Information) (Amendment) Regulations 2007 and come into effect on 1 September 2007. The penalty regime is subject to House of Commons' approval of the draft Tax Avoidance Schemes (Penalty) Regulations 2007 and they are unlikely to take effect until November 2007.

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Further information:
The Social Security Contributions (Managed Service Companies) Regulations 2007
Explanatory Memorandum to The Social Security Contributions (Managed Service Companies) Regulations 2007
The Income Tax (Pay as You Earn) (Amendment No. 2) Regulations 2007
Explanatory Memorandum to The Income Tax (Pay as You Earn) (Amendment No. 2) Regulations 2007
The Social Security (Contributions) (Amendment No. 5) Regulations 2007
Explanatory Memorandum To The Social Security (Contribution) (Amendment No. 5) Regulations 2007
The Disclosure of Tax avoidance schemes
The Tax Avoidance Schemes (Information) (Amendment) Regulations 2007
Explanatory Memorandum to Income Tax: The Employment Income (Meaning of Securities) Order 2007
Draft Tax Avoidance Schemes (Penalty) Regulations 2007
Explanatory Memorandum to the Draft Tax Avoidance Schemes (Penalty) Regulations 2007