HMRC have compiled articles together with questions and answers in response to emerging developments in the Service Company sector.

The articles do not represent a change in policy from HMRC, rather they seek to clarify existing policy in light of recent developments. Particularly, there has been no change of policy in terms of individuals genuinely in business on their own account who provide their services through a company which they control.

The term ‘Managed Service Company’ (MSC) is defined in legislation having regard to certain criteria. In general terms, an MSC is one which is provided specifically to enable a worker to avoid tax and National Insurance contributions on employment income. Individuals who arrange for their income to be paid via a company with the intention specifically to avoid employed levels of tax and National Insurance contributions need to consider carefully whether the company through which they are paid may be an MSC.

Full details of HMRC's position in respect of service companies are available at http://www.hmrc.gov.uk/news/cis-msc.htm