The Managed Service Company ('MSC') legislation was introduced in the 2007 Finance Act, the new law is now in place, and the HMRC guidance (which whilst indicating the HMRC intentions, does not itself have the force of law) as to how they intend to interpret it has been issued (July 2007).
The intent behind the law was to put out of business those who were managing service companies for workers, thus enabling workers to take advantage of splitting their income between salary and dividends, without having involvement themselves in the operation of their service companies.
The consequences of a company being an MSC are now potentially serious:
· For the company itself, all income derived by the worker from a contract for the worker's services is deemed to be employment income and must be taxed as such – whether or not the contract would have fallen inside IR35
· For those dealing with the company, there are risks that any unpaid tax debt of the MSC may end up being transferred to and recovered from them.
Overall, MSCs are now bad news - the tax consequences of 'being' one are not remotely attractive.
So a company needs to know
If you as a service company want advice as to whether or not you fall within the definition of an MSC, either for peace of mind, or to assist your marketability, we can help.
And if you, as an agency, client, or otherwise as a person dealing with a particular company want reassurance either that it is not an MSC, or of the degree to which you may be exposed to risk if it is, we can help.
Either way, we will
· ask some questions, and receive and consider written replies
· form an opinion
· provide a digitally signed written opinion, annexing a summary of the facts on which the opinion is based.
In most circumstances this is a service we offer for a fixed price of £150+VAT; if we feel a specific situation will fall outside this fixed price we will tell you before you are committed.
Just mail us with an outline of the situation, and we'll respond by telling you what information we will need to advise, and to confirm the cost.
This page was last updated on 21st August 2007
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