Managed Service Companies legislation

[Recruiter magazine]

Hi,

Recruiter magazine is doing an article about the Managed Service Companies legislation, and is looking to hear from contractors about how it has affected them. For example what difference has it made to their tax/administrative arrangements, as well as relationships with recruitment agencies, service providers, and end users.

Has it been a good or bad thing as far as contractors are concerned?

Please contact me if you have any views.

My number is (office) 0207 970 4803 and
(mobile) 07811 050 623


This request has been approved by Contractor UK

Owing to a tight deadline I would need to hear from contractors as soon as possible.


Many thanks,

Colin Cottell

[malvolio]

Have never used an MSC, so can't/won't answer the question I think you're asking directly. However...

Has it been a good or bad thing as far as contractors are concerned?

...depends how you define "contractor". If you take the view that a large number of MSC users were pretending to be freelance contractors with a company they had no part in creating or managing, then you might conclude that they were doing so merely to gain a taxation advantage that they had no real right to.

Luckily, HMG - who took exactly that view - decided to close the anomaly, and has ensured that if you have no controlling interest in the company through which you work, then you pay full PAYE and dividends. Even more luckily, they actually tried to do it in such a way that only the right people got hit: unlike IR35, for example, which was aimed at a whole sector for no other reason that maximising the tax take and to the devil with the concomitant damage to that sector of the workforce.

Also, by removing the nonsense of the MSC approach, it has ensured that contractors either work for their own, properly consitiuted companies, taking their own decisions and managing their own risks and correctly gaining the tax advantage of company ownership. Those that don't do so pay employee-level tax. Adn that, amazingly for this particular government is a prettty fair situation.

Overall then, a good thing. The contractor now has a clear risk/reward question, and removing the artifical companies from the mix has made it easier to defend the "One Man Band" business model as being totally legitimate.

[kingshuk]

Recruiter magazine is too busy to read posts here So (s)he has given a mobile phone number where you can tell your views

[wendigo100]

I've always worked through my own Limited Company. I don't really know what a Managed Service Company is.

Is it the same an an Umbrella company?

[Bluebird]

I've always worked through my own Limited Company. I don't really know what a Managed Service Company is.

Is it the same an an Umbrella company?

No, but the end result is the same.

With an MSC you have your own company but pay Full Paye & MRSP Fees.
With and Umb, you're employed by the Umb, pay FULL Paye & Umb Fees.

[malvolio]

I've always worked through my own Limited Company. I don't really know what a Managed Service Company is.

Is it the same an an Umbrella company?

The difference was an MSC used to set you up with a company so you could go the low pay and dividends route; this despite you having no knowlege of or interest in the company you "owned", which they managed for you to the extent of doing all the invoicing and deciding what you got paid. Hence you got all the benefits of being a company owner with none of the responsibility, so - at least to my eyes - were doing nothing to deserve company taxation benefits.

You can still use an MSC of course, but all income has to be paid as salary, just like an umbrella.

[wendigo100]

My thanks to the Welsh wing of the CUK for those answers.

I'm glad I'm out of all that MSC nonsense.