Managed Service Company Guidance Note
Posted Jul 12, 2007
HMRC have released a guidance document on the managed service company legislation.
The legislation, which is contained within the Finance Bill 2007, aims to ensure that income received by individuals who provide services to an end user (via an MSC) will be treated as employment income.
Therefore, the MSC will have to account for Income Tax (PAYE) and National Insurance on all payments received by individuals using the Company.
For a company to be called a "Managed Service Company", a number of conditions must be met (these conditions are laid out in the guidance note).
Indicators of whether a service provider may be an MSC provider (extract from guidance note)
Questions to consider
1. Do all of the companies the service provider supports have a unique identifier? (e.g. John Smith (well known provider) Ltd, Pete Brown (well known provider) Ltd.)
2. Does the service provider determine, or seek to determine, terms and conditions relating to the client company, or individual? e.g.:
- Format of contract
- Payment arrangements
- Payment rates
- Invoicing arrangements
- Terms under which the individual will work
3. Is authority for any aspect of the company's trading/provision of the individual's services, delegated to the service provider, e.g.:
- Receipt, or payment, of company funds (particularly payment into a common bank account.)
- Contractual arrangements
4. Does the service provider interpose themselves between the individual /company and the Recruitment Business in any other way whatsoever
5. Does the service provider interpose themselves between the individual/company and the client in any other way whatsoever
6. Does the service provider only support service company clients
7. Is the individual work seeker unable to change service provider and retain their company
If the answer to any of the above questions is "yes", particularly questions 2, 3, 4 and 5, the service provider may be an MSC provider All content ©Contract Eye Limited | Protected by Copyscape | Scroll down for related articles
- Professional Indemnity Insurance - Essential cover from Hiscox
- Helix Management Ltd - Up to 90% retention. Same day payments
- Parasol - the UK's favourite umbrella company
- Qdos - IR35 experts - Providers of low cost contractor insurance
- Contractor Finance - up to £30,000, when you need it
- Umbrella Company - 12,000 contractors can't be wrong!
- SJD Accountancy - UK's largest Accountants to Contractors
- Together we're stronger! - Join PCG, representing contractors
- ClearSky Accounting - specialist support for contractors
- Free IR35 & Tax Review - Call ICS on 0800 195 3750
- InTouch Contractor Accounting - Clients love our personal service
- Contractor Mortgages - Based on your daily rate alone