managed service companies (pls help!)

[scruffy]

Some folk work self employed via 'managed service companies', if my lady worked for the place she works in 'normally' she would only get the equiv of half her wages - these companies allow her to claim travel, tax breaks etc and do quite nicely (twice my wage!!) - now i know these companies do sod all for generous% cut and may not be the most altruistic of bodies but...

mrs scruffy has received a letter;

'...in Dec 06 the chancellor announced plans to address...'managed service companies'... new laws come into effect.. so we've moved the goal posts... there are new options...

i. a service to allow mrs scruffy to have her own company and outsource the "complex" administration and accounting functions - a personal service company... (same gravy train to me)

ii. umbrella company - full tax and NI deducted from earnings with allowable business expenses offset against taxable...

it would seem she's lost more of her earnings with this letter...

1. is the Govn. actually sqeezing out the charlatans;

2. are these guys trying to make a quick killing, at the expense of their 'workers'...

3. is the 'law' real?

please help me understand!! these MSC's sound like dodgy football agents!!!

thank you!!

Edited by scruffy on Saturday 3rd March 12:05

[scruffy]

Bump - any thoughts?

[ewenm]

The government are cracking down on the managed service companies - that is true. I work through my own limited company and have an accountant that helps sort out a tax efficient way of extracting the money from my company (a mix of salary and dividends, paying a mix of PAYE, NI and Corp Tax).

I'd suggest you look into this. It's not as complicated as it sounds, honest

Oh and check the business forum on here (I suspect this thread will be moved there shortly).

Edited by ewenm on Thursday 8th March 11:47

[deva link]

scruffy said:

if my lady worked for the place she works in 'normally' she would only get the equiv of half her wages

If she works there all the time then isn't she 'really' an employee?

[Eric Mc]

Many Managed Service Companies were abusing their position by paying their "employees" using dividends - which is just not allowed for employees.
Those Managed Services Companies who deducted the normal normal PAYE and NI amounts from the payments made to "employees" are in the clear.

If she has to set up her own company, she needs to be completely aware of the requirements regarding IR35.