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IR35 versus MSC

29 October 2013
Issue: 4426 / Categories: Forum & Feedback , IR35 , Employees , Income Tax

Several clients operate as contractors through personal service companies. The contracts have been reviewed by a specialist firm, which provides insurance cover against income tax and National Insurance liabilities if the IR35 rules apply

A number of my clients are contractors operating through personal service companies. They have all had their contracts reviewed by a specialist firm that also provides insurance which in the event that IR35 is considered to apply covers any tax and National Insurance liability.

Many of the contractors withdraw all of their company’s income in the form of a low salary and dividends.

I have re-examined the managed service company (MSC) legislation in ITEPA 2003 Part 2 Ch 9. The legislation (s 61B) applies where among other things: the personal services of one or more individuals are supplied by a company; payments are made to the individual(s) that result in a greater amount being received than would be the case if they were paid by way of employment remuneration; and there is an MSC provider involved with the company in one or more certain ways.

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