Managed Service Companies - What is a Managed Service Company?

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What are the rules ?

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2. Reimbursement of Expenses

The MSC rules apply new rules for tax relief for travel expenses to put contractors using MSC’s in the same position as “employed” workers by treating each of their engagements with an end client as if it were a separate employment with the end client carried out a permanent workplace.

3. Debt Transfer

In the past, MSC’s have been dissolved prior to enquiry by HMRC. If HMRC have discovered/asserted that there has been an underpayment of tax and/or NIC, they have found it difficult to recover the lost tax revenue from the MSC> This is because even though they did have powers to do so, those powers required complicated individual recovery proceedings in each case. The MSC rules address this, and allow the recovery of the tax loss from appropriate third parties such as the end clients, the agencies, the directors, etc.

What to do ?

The solutions available to contractors are to use PAYE or to continue using an MSC in the understanding that it MUST operate PAYE (including NIC) and that its failure to do so could result in the contractor being pursued for the tax loss. For contractors who are genuinely self employed and who have taken entrepreneurial risk, this will not be an acceptable option.

The other option, is to use a Personal Service Company (PSC) - and to ensure that it is not a “managed” one. When selecting your PSC provider, be sure to check thoroughly why they think theirs is not a “managed” PSC.

There are other schemes in existence other than the main ones we have considered, but again – you should check very carefully with the solution provider as to why they think theirs is not a “managed” solution. You should treat any solution that appears to be operating in a grey area as a higher risk solution.

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Full index of pages:

Home Page IR35 Background - page 1 IR35 Background - page 2 IR35 Background - page 3

IR35 Rules - page 1 IR35 Rules - page 2 Beat IR35 - page 1 Beat IR35 - page 2

Beat IR35 - page 3 Beat IR35 - page 4 Ltd Company - page 1 Ltd Company - page 2

Ltd Company - page 3 Ltd Company - page 4 Umbrella Companies - page 1

Umbrella Companies - page 2 Composite Companies - page 1 Composite Companies - page 2

Composite Co - page 3 Composite Co - page 4 MSC - page 1 MSC - page 2 IR35 Insurance

IR35 Investigations - page 1 IR35 Investigations - page 2 Contracts - page 1

Contracts - page 2 Contracts - page 3 Resources 1 Resources 2 Resources 2 Sitemap