Managed Service Company/ Limited Company question

[Mr Pancamo]

Hi

There's been a lot in Gordo's budget regarding Managed Service companies. My limited company is not run as one of these - I pay myself a salary of £x a year, and PAYE/NIC's are deducted from this. On top, I pay myself dividends every now and then which aren't taxed.

So, what is a MSC? Is it a limited company that is actually run by another business (e.g. 1stContact who act as an MSC Provider) who sort out all the finances for the contractor and pay them money? Before this budget, were there people who didn't pay PAYE on their income and now their forced to?

Just not sure of the definitions which aren't that clear on the internet?

Any help appreciated!

[Bluebird]

see the sticky post at the head of this board.


essentially yes.

an MSC is a company that 'manages' your ltd co for you - Gordon has said these are just tax evasion and you now have to be either a Ltd company and sort it out yourself or go through an umbrella and pay PAYE on whatever you earn.

[Mr Pancamo]

Thanks, I did read the sticky but just had some questions.

I'm not sure still how Gordo can call MSC 'tax evasion' anymore than getting an accountant to advise you on how much tax to pay?

Cheers for the reply!

[Euro-commuter]

Thanks, I did read the sticky but just had some questions.

I'm not sure still how Gordo can call MSC 'tax evasion' anymore than getting an accountant to advise you on how much tax to pay?

Cheers for the reply!

He wants you to decide clearly whether you are "doing work that is of the nature of employment", or running a business. If the former, get a pure PAYE umbrella and pay PAYE+NICs on every penny, as an employee does. If the latter, get a Ltd Co.

MSCs are seen as the status of employment with the tax advantages of not being employed.

Personally I don't have a problem with that choice being made clear; my problem is that I believe that I (like most of us perhaps) am really doing work that is of a third kind: self-employment. Unfortunately they have made such an unfixable pig's ear of the whole taxation system that they have a financial reason for disallowing that. Cf other countries e.g. France where self-employment is taxed exactly the same as employment: there, Monsieur Hector has nothing against you being self-employed, so almost all contractors are. The correct status and the correct tax.