NET 85% OF YOUR INCOME: www.tarpon-uk.com 0845 643 1580 Contractors and agencies keep warning me about Managed Service Companies. What are they exactly? The definition of an Managed Service Company or MSC in the legislation includes both composites and managed personal service companies. The MSC provider promotes the use of such companies and offers the structure. The worker is a shareholder, but does not have any control over the company. & what does the MSC legislation do? The key parts of the legislation took effect from 6th April 2007 and applies through whichever route the worker receives their income. This means that PAYE and Class 1 National Insurance Contributions must be applied to all income received by individuals in mscs in relation to their services. If an MSC cannot pay the PAYE and National Insurance Contributions that it is liable for, under the MSC legislation the debt can be transferred to a third party, including the contractor, the MSC provider and, in certain circumstances, the recruitment agency. So who is affected? Primarily it is the workers who use Managed Service Companies to provide their services, because the legislation is concerning taxation of that persons income. The legislation also affects MSC Providers which is anyone who makes Managed Service Companies available Who is not affected then? Workers operating through a Personal Service Company that is not within the new definition of an MSC. And workers operating through Umbrella Companies …
