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This is a presentation to show how MSC legislation has affected Agencies and Contractors?
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A Managed Service Company (MSC) is a form of intermediary company which enables workers to provide their services to end clients.
The definition of an MSC in the legislation includes both 'composites' and 'managed personal service companies'.
A 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?
It deems any payments received by an individual working through an MSC to be employment income.
This means that PAYE and Class 1 NICs must be applied to all income received by individuals in MSCs in relation to their services.
The legislation applies whatever the form through which the worker receives their remuneration.
What does the MSC legislation do?
If an MSC cannot pay the PAYE and NICs that it is liable for, under the MSC legislation the debt can be transferred to a third party, including the company's director, the MSC provider and, in certain circumstances, other third parties that may have benefited from the placement.
The key parts of the legislation took effect from 6th April 2007 and in August 2007 the Finance Bill was formally enacted, meaning the full legislation, including transfer of debt provisions, is now in force.
When is an MSC not an MSC?
A number of MSC Providers have been telling their clients that they are accountants rather than MSC Providers in response to the legislation, leading individuals to believe that they are not affected by the MSC Legislation.
HM Revenue & Customs actually still views many of these organisations as MSC Providers. The relationship between the client's company and the MSC Provider is what will determine whether the new tax rules apply or not.
Individuals who have continued to operate through such service companies need to carefully consider their relationship with the MSC Provider. If the service company is within the legislation, and has not operated on a PAYE basis, the individual could be held personally liable for the debts.
Who is affected? Who isn't?
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 person's income.
The legislation also affects anyone who makes Managed Service Companies available (MSC Providers).
In certain circumstances, the legislation may also affect other third parties.
Who is affected? Who isn't?
Who is not affected?
Workers operating through a Personal Service Company that is not within the new definition of a MSC.
Workers operating through Umbrella Companies.
Tags
Inland Revenue, Budget, Managed Service Companies, MSC, Legislation, HMRC, Recruitment agencies, Contractor, Tax, National Insurance, NI, expenses, Offshore, Tarpon payroll, Finance Act 2004, Section 660A, IR591, Proceeds of Crime Act 2002
Tags: inland revenue budget IR35 legislation HMRC recruitment agencies NI LTD PAYE umbrella self assessment tax return payroll
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