Draft Chapter 9 of The Income Tax (Earnings and Pensions) Act 2003

[The Lone Gunman]

Managed service companies (earnings from employment)

MANAGED SERVICE COMPANIES

Application of this Chapter

61A Scope of this Chapter

(1) This Chapter has effect with respect to the provision of services by a
managed service company.

(2) Nothing in this Chapter.

(a) affects the operation of Chapter 7 of this Part (agency
workers), or

(b) applies to payments or transfers to which section 966(3) or (4)
of ITA 2007 applies (visiting performers: duty to deduct and
account for sums representing income tax).

61B Meaning of “managed service company”

(1) A company is a “managed service company” if-

(a) its business consists wholly or mainly of providing (directly
or indirectly) the services of an individual to other persons,

(b) payments are made (directly or indirectly) to the individual
(or associates of the individual) of an amount equal to the
greater part or all of the consideration for the provision of the
services,

(c) the way in which those payments are made would result in
the individual (or associates) receiving payments of an
amount (net of tax and national insurance) exceeding that
which would be received (net of tax and national insurance)
if every payment in respect of the services were employment
income of the individual, and

(d) a person who carries on a business of promoting or
facilitating the use of companies to provide the services of
individuals (.an MSC provider.) is involved with the
company.

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I wonder how long it will take Mr Brown to change 61A to put in Managed Service Company or Personal Service Company?

61B (a,b,and c) could be interpreted to make PSCs into MSCs.
Given Gordos track record it would not surprise me if that is his intent.
If he becomes PM he will push his succesor down the same road.

On the up side, there is always the chance that he wont be PM or will be only till the next election.

[Bluebird]

The problem with that is that MSC is specific in that it only covers the companies that people use to avoid paying tax, it defines that the only 2 ways for contractors / freelancers to use are :

1. Umbrella - where you pay full whack
2. Ltd Company - where you pay all the company taxes [ i.e. Corp tax ] which he's already increased to counter act this.

By adding PSC's to 61a - he would need to be VERY careful in the definition - I don't think he could do this without 'catching' a whole load of small-one-man businesses that are nothing to do with contracting & freelancing.

These businesses are already peed off with the Corp Tax hike, then to make them pay full IT & NI would cripple a lot of them.

[Robot]

Managed service companies (earnings from employment)

MANAGED SERVICE COMPANIES

Application of this Chapter

61A Scope of this Chapter

(1) This Chapter has effect with respect to the provision of services by a
managed service company.

(2) Nothing in this Chapter.

(a) affects the operation of Chapter 7 of this Part (agency
workers), or

(b) applies to payments or transfers to which section 966(3) or (4)
of ITA 2007 applies (visiting performers: duty to deduct and
account for sums representing income tax).

61B Meaning of “managed service company”

(1) A company is a “managed service company” if-

(a) its business consists wholly or mainly of providing (directly
or indirectly) the services of an individual to other persons,

(b) payments are made (directly or indirectly) to the individual
(or associates of the individual) of an amount equal to the
greater part or all of the consideration for the provision of the
services,

(c) the way in which those payments are made would result in
the individual (or associates) receiving payments of an
amount (net of tax and national insurance) exceeding that
which would be received (net of tax and national insurance)
if every payment in respect of the services were employment
income of the individual, and

(d) a person who carries on a business of promoting or
facilitating the use of companies to provide the services of
individuals (.an MSC provider.) is involved with the
company.

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I wonder how long it will take Mr Brown to change 61A to put in Managed Service Company or Personal Service Company?