Managed Service Companies (MSC)

Key Facts

  • From 6 April 2007 all payments received by individuals providing their services through Managed Service Companies (MSCs) will be subject to PAYE;
  • From the same date the cost of travel from the individual’s home to the individual’s place of work is not an allowable tax-free expense for workers within MSCs;
  • It is planned that from 6 August 2007 National Insurance Contributions will also be due on all payments received by individuals working through MSCs;
  • Also from August, where the PAYE and NICs debts of an MSC cannot be recovered from the company, HMRC may transfer the debt personally to:
    • The company’s director; or
    • The MSC Provider
  • Debts may be transferred to other third parties from 6 January 2008.

Overview:

The consultation document Tackling Managed Service Companies published on 6 December 2006, described Managed Service Companies (MSCs) and set out the Government’s plans to address the significant and increasing risk they pose to the Exchequer, and the loss of a level playing field for workers and businesses who pay the correct employed levels of tax and national insurance. Personal Service Companies will not be within the scope of these measures with the Intermediaries legislation remaining in place as at present.