Budget - Composite Companies Dead!

[simondolan]

"Managed Service Company Schemes

The Government is taking action to tackle Managed Service Company (MSC) schemes which are used to avoid paying employed levels of tax and NICs. Income received by workers in MSCs in relation to services provided through the MSC will be subject to employed levels of tax and NICs, with the MSC obliged to operate Pay As You Earn (PAYE) and deduct tax and Class 1 NICs on that income - and the rules for tax relief for travel expenses will be the same as for other employed workers. The Government will also address the problem of MSCs escaping payment of tax and NICs due by allowing the recovery of these debts from appropriate third parties.

This will protect the Exchequer and ensure a level playing field for compliant businesses and workers. The Intermediaries legislation will remain in place for Personal Service Companies.

The Government is consulting on the draft legislation to implement this measure. The draft legislation and questions for consultation are set out in the consultation document Tackling Managed Service Companies, published alongside the Pre-Budget Report today."

[Bagpuss]

Is an umbrella company an MSC?

[malvolio]

Is an umbrella company an MSC?

Well done - today's most misguided question!

Umbrellas treat you as an employee for tax purposes so they already pay PAYE and NICs. No point in chasing them really, is there?

[Bagpuss]

Well done - today's most misguided question!

Umbrellas treat you as an employee for tax purposes so they already pay PAYE and NICs. No point in chasing them really, is there?

I couldn't really give a toss as I'm Ltd, aren't they both known as managed schemes? moreover, Aside from the issue above I think the government might be interested in some of the 'expense' claims some umbrella companies advise on, after all they are tax deductable (for expenses not actually incurred, mmm dodgy). Anyway just thought I'd feign some interest, please move on nothing to see here.

[Xenophon]

Well done - today's most misguided question!

Umbrellas treat you as an employee for tax purposes so they already pay PAYE and NICs. No point in chasing them really, is there?

Quite right as usual, Mal.

Although the really, really uneducated should check the details of the scheme they have, as many umbrella companies offer both umbrella AND MSC schemes.

Glad I went ltd...

[Bagpuss]

Quite right as usual, Mal.

Although the really, really uneducated should check the details of the scheme they have, as many umbrella companies offer both umbrella AND MSC schemes.

Glad I went ltd...

Sorry for not educating myself in dodgy ways of operating.

[hattra]

Well done - today's most misguided question!

Umbrellas treat you as an employee for tax purposes so they already pay PAYE and NICs. No point in chasing them really, is there?

So what do they mean by a managed service company?

[Ivor1]

"Managed Service Company Schemes

The Government is taking action to tackle Managed Service Company (MSC) schemes which are used to avoid paying employed levels of tax and NICs. Income received by workers in MSCs in relation to services provided through the MSC will be subject to employed levels of tax and NICs, with the MSC obliged to operate Pay As You Earn (PAYE) and deduct tax and Class 1 NICs on that income - and the rules for tax relief for travel expenses will be the same as for other employed workers. The Government will also address the problem of MSCs escaping payment of tax and NICs due by allowing the recovery of these debts from appropriate third parties.

This will protect the Exchequer and ensure a level playing field for compliant businesses and workers. The Intermediaries legislation will remain in place for Personal Service Companies.

The Government is consulting on the draft legislation to implement this measure. The draft legislation and questions for consultation are set out in the consultation document Tackling Managed Service Companies, published alongside the Pre-Budget Report today."

oh ****, was with MSC GAINT but now limited, how far are they likely to back date the tax, and will they totally ignore the fact the contracts were outside of IR35 if they were

[Ivor1]

So what do they mean by a managed service company?

GIANT Powerhouse is one

[malvolio]

oh ****, was with MSC GAINT but now limited, how far are they likely to back date the tax, and will they totally ignore the fact the contracts were outside of IR35 if they were

Depends on the legislation, but IR35 status is nothing to do with it, this is about avoiding tax artifically.

At a minimum they have already reserved the right to apply new legislation retrospectively back to Dec 2004, but depending on how they do it you might be going back 6 years.

To put that in some sort of context, at best the average contractor will be looking at a bill of around £25k...