Managed Service Company Legislation 2007

April 2007

Following the budget on the 21st March 2007 it is clear that the Chancellor has widened the definition of an MSC, such that the legislation could affect end clients, agencies, intermediaries and organisations providing services to PSC's (Personal Service Companies), for instance even insurance company providers.

The debt transfer provision has been delayed to January 1st 2008 to allow a practical period of time for organisations to provide the necessary checks and balances. This helps to avoid accidentally becoming an MSC and being liable for unpaid taxes due from a PSC, that they have direct or indirect association with.

Contractors moving from redundant MSC companies are either opting to contract through a PAYE Umbrella or choosing to set up a new PSC. If contractors opt for the PSC route they will need to ensure it is set up correctly and legally by a qualified accountant and operating outside IR35 to gain any financial benefits over full time PAYE Employment.

What next?

• If you currently operate through an MSC, you must find an alternative: either PAYE Umbrella or PSC (from a qualified accountant only)
• For contractors already using a PAYE Umbrella the new legislation does not apply.
• If you're a new or existing contractor wishing to contract through a PSC, you need to get assistance from a qualified account to help administer your business affairs.

BITE Consulting are not, nor have ever been, a financial advisor or managed service company provider, we assist contractors in creating CV's and offer marketing and training support packages to help launch contracting careers in the UK IT market. For highly skilled consultants we provide PAYE Employment opportunities and PAYE Umbrella services, and suggest that you seek professional advice for Visa, company formation, legal and financial services from fully qualified professionals.

BITE can negotiate a discount for their professional services if required, for further information contact us.

Regards

Keith Boatman
Director
BITE Consulting