I've just been speaking with one of our clients, who runs a small but growing accountancy practice in North London. Well, he thought it was small but growing, until he logged on the HMRC Online website this morning and found that, actually, it was rapidly shrinking.

According to the HMRC website, he is down to 2 clients. A bit of a shocker for him and, no doubt, for his clients.

It appears that those terribly clever IT type people over at HMRC have done some kind of service upgrade and have managed to migrate several thousand records into the ether.

But don't worry, the "technicians are working on this". Well, that's OK, then, isn't it!

Following April's change in the rules governing managed service companies (MSCs), it appears likely that HMRC will clamp down on those MSCs who are claiming to be "professional accountants".

Following the new regulations implemented in April, many managed service companies appear to have rebranded themselves as "professional accountants" in an attempt to exploit an exemption in the legislation.

However, contractors should be warned that their one man limited companies could be deemed MSCs "if they are supported by a specialist service provider (MSC provider) who is 'involved' with their company."

The penalties for this will be that the contractor will be liable for full tax and NI on his or her earnings.

Personally, I fully support the PCG's attempts to get the law clarified and to support contractors in their attempt to show that they should not be classed in the same bracket as full time employees.

However, contractors would do well to listen to the advice of Matthew Brown, Managing Director, giant group, who says :

"Contractors and recruiters dealing with MSC providers are taking huge financial risks. A lot of MSC providers are reassuring their clients that they are fully compliant with the new law, but they are fooling themselves if they think HMRC would introduce anti-avoidance legislation, only to leave a 'loophole' allowing MSC providers to sidestep it by claiming to be 'professional accountants'."