Umbrella or MSC - what's the difference?

[Bluebird]

Thanks Lisa - so what's the difference between an MSC and an Umbrella Company?!!!?!

R

With an umbrella you pay everything via PAYE
With an MSC it was a mixture of Dividends & PAYE

[Rialto99]

right so what's the difference NOW?

Surely there has got to be something 'different' (number of employees/contractors, share ownership etc) between an MSC and an Umbrella Company?....NOW

Please someone....anyone!

Cheers
R

[malvolio]

Yes. MSC's can only operate if they pay you under full PAYE rules and with a limted expenses policy (effectively, no expenses...). They can operate the company on your behalf, still do all the invoicing, pay the cheques, run the bank account and do the paperwork.

But why pay someone money to do all the things you can do yourself as a business if you are not getting any commercial benefit in the way of reduced taxation to compensate the extra work and lack of benefits. Sounds like madness to me...

[Rialto99]

cheers M, so what's the difference between an MSC and an Umbrella Company?

I'm begining to think that NOBODY ACTUAL KNOWS, not even Lisa at ContractorUmbrella, as in, someone who's running a b1oody Umbrella Company?

Can anyone please give me a nice and simple answer?

Something like:

MSC - 1 employee, he/she owns 100% of company in shares
Umbrella - several employess, shares are not owned by employees

would be absolutely b1oody brilliant....

Cheers
R

[LisaContractorUmbrella]

right so what's the difference NOW?

Surely there has got to be something 'different' (number of employees/contractors, share ownership etc) between an MSC and an Umbrella Company?....NOW

Please someone....anyone!

Cheers
R

I'll have another go. Basically, there is no such thing as an MSC now. You have umbrella companies or limited companies - that's it.

[malvolio]

And at the risk of labouring the point, you can hand all your company admin and financial authority off to someone else, who would then be an MSC, but there's no point or even logic in doing so. If you can't be bothered to run your own company, use an umbrella and take the hit on the taxation. Them's the only realistic choices.

[brobi]

I'll have another go. Basically, there is no such thing as an MSC now. You have umbrella companies or limited companies - that's it.

So go limited and give my accountant a ring PM me for his number or email address which ever works for you.

B

[Rialto99]

I'll have another go. Basically, there is no such thing as an MSC now. You have umbrella companies or limited companies - that's it.

***************************************

Thanks Lisa -

Let me put it another way...

The MSC legislation states that an MSCs cannot claim expenses anymore (apart from those than 'employees' would be able to claim). So If I were to use ContractorUmbrella AND start claiming my expenses, why are you NOT an MSC based on the definition below and therefore compliant under the new legislation? What makes ContractorUmbrella NOT an MSC????

From looking at the characteristics below, ContractorUmbrella IS AN MSC

An MSC:

a) the freelancer will contract through to provide their services, YES

b) the freelancer will receive their payments from, YES

c) the freelancer benefits from in a way that means they receive more money than if they had been in employment, YES (by offsetting expenses)

d) an MSC Provider is involved with YES


Cheers
R

[Lewis]

cheers M, so what's the difference between an MSC and an Umbrella Company?

I'm begining to think that NOBODY ACTUAL KNOWS, not even Lisa at ContractorUmbrella, as in, someone who's running a b1oody Umbrella Company?

Can anyone please give me a nice and simple answer?

Something like:

MSC - 1 employee, he/she owns 100% of company in shares
Umbrella - several employess, shares are not owned by employees

would be absolutely b1oody brilliant....

Cheers
R

It's not that nobody knows, you are not understanding the answers.

An MSC is a limited company. As such it could have any number of directors, shareholders and employees - there is no fixed structure. The only thing that defines it as being an MSC (as opposed to a non-MSC limited company) is that it deals with an MSC provider. You have to read the new MSC legislation to get the definitions of MSC and MSCP and what classifies dealing with but there are lots of threads about it.

So ... you could THINK you are a normal limited company but if you deal with an MSCP you will become categorised as an MSC!

If you are categorised as being an MSC then you cannot declare dividends. So it's essentially your limited company turned cr&p.

What I think you are refering to when you talk about MSC are schemes like Giant's (no longer running) which were composite companies. i.e. many contractors who are employees and shareholders working through the same company which is entirely administered by the MSCP (e.g. Giant). The exact structure of the Ltd company would be decided by the MSCP (e.g. Giant). You would have recieved PAYE + Dividends. But the new legislation means you can no longer take dividends. i.e. There is no point being in an MSC any more as the benefits of dividends have been removed.

In summary .. I think 90% of the old MSCs have shut down. So in reality I don't think you can join a scheme like this anymore. And even if you could there would be no point you might as well join an umbrella where you get better expenses. Which means you either start up a limited company (and don't have any dealings with the likes of Giant - ex-MSCPs - to avoid being classified as an MSC) or join an umbrella.

[LisaContractorUmbrella]

I'll have another go. Basically, there is no such thing as an MSC now. You have umbrella companies or limited companies - that's it.

***************************************

Thanks Lisa -

Let me put it another way...

The MSC legislation states that an MSCs cannot claim expenses anymore (apart from those than 'employees' would be able to claim). So If I were to use ContractorUmbrella AND start claiming my expenses, why are you NOT an MSC based on the definition below and therefore compliant under the new legislation? What makes ContractorUmbrella NOT an MSC????

From looking at the characteristics below, ContractorUmbrella IS AN MSC

An MSC:

a) the freelancer will contract through to provide their services, YES

b) the freelancer will receive their payments from, YES

c) the freelancer benefits from in a way that means they receive more money than if they had been in employment, YES (by offsetting expenses)

d) an MSC Provider is involved with YES


Cheers
R

The MSC legislation was introduced to target a very specific group of companies i.e. Managed Service Companies. MSC's set up limited companies for contractors and then paid them a combination of minimum wage and dividends. Because there was little care taken by the MSC's to ensure that said contractors were outside IR35 the IR decided to introduce legislation which would ensure either their closure or their compliance. Therefore, as the only way to be compliant is to operate via PAYE, if you are a third party, some MSC's have chosen to continue to operate but to make payments via PAYE. Umbrella companies have always paid via PAYE and therefore are unaffected by the legislation.