Personal Services Companies
What’s a PSC?
As a contractor, you may often find you are asked to operate as a Personal Services Company (PSC) by the end client. Simply put, this is a limited company with directors and all the tax and legal obligations that come with that. For many this can be a confusing area.
Our team of experts are on hand to help you understand the ins and outs of setting up as a PSC, the various forms of remuneration open to you and ongoing filing obligations, right through to closing down your PSC if your circumstances change.
Managed Service Company Legislation
HMRC are launching investigations against contractors’ Personal Service Companies (PSCs) citing breach of Managed Service Company (MSC) Legislation. You may have received a letter form HMRC and be unsure of your next steps. This will likely be in the form of a Regulation 80 determination, which are assessments for underpayment of income tax on a company.
The MSC legislation was established to counteract the use of Personal Service Companies where, essentially another party runs the company, with the contractor receiving the tax benefits of being an incorporated body by being paid a salary from the company below their market rate and receiving the remaining payment for services through a distribution of company profits at lower tax rates such as dividends.
The MSC provisions are found in Chapter 9 Part 2 Income Tax (Earnings and Pensions) Act 2003 and The Social Security Contributions (Managed Service Companies) Regulations 2007.
MSC legislation explained
We have developed a four part guide to walk you through this complex area which you can read here or skip to:
- I’ve received a letter from HMRC, what do I do next?
- Background to the Managed Service Provider Legislation
- Could your accountant be identified as an MSCP?
- What does this mean for you?
Or if you prefer, you can watch our webinar here.
If you have received a letter from HMRC already, or if you are operating a PSC and are in any way unsure whether the legislation applies to you, please do get in touch. Our initial consultations are free of charge. Contact our team today and discover how we can help you.Need help? Contact our team today
MVL of PSC
Employment & contractual disputes
Directors loan accounts
I’ve not been a contractor before and when I was asked ‘you’re a PSC aren’t you?’ I had no idea what to say. WTT explained it all to me, answered my questions and then helped me to set it all up. Brilliant stuff!
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