MSC and Transfer of Debt

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MSC and Transfer of Debt

Summary

The Managed Service Company (MSC) concept was formally enacted in April 2007 to remove any tax benefits that MSC schemes could procure to workers operating through them. It prevents multiple contractors from being paid through a single limited company, also known as a composite company, while they are not truly self-employed and have no responsibilities with regards to running and managing that limited company.

Consequently, as from 6 April 2007 and 6 August 2007, the income of a worker providing services through an MSC is subject to Pay as You Earn (PAYE) and National Insurance Contributions (NIC), respectively. The new legislation replaces IR35 for workers operating through MSCs while IR35 continues to apply to workers operating through their Personal Service Companies (PSCs).

How does the legislation affect your agency and candidates?

Non-payment of the relevant PAYE and NICs by your candidates is treated as a debt recoverable from the MSC. The legislation has also introduced the “transfer of debt” concept with much emphasis. It ensures that all the other parties in the supply chain who are actively involved in the provision of the worker’s services through an MSC are caught and made liable in case due PAYE/NICs are irrecoverable from MSC workers. Therefore, if you want to protect your agency from a debt transfer liability or its risks, it is better that you work with candidates who operate through PSCs by engaging an independent accountancy firm who have been audited – such as Churchill Knight & Associates Ltd.

Accredited by the FCSA

Churchill Knight and all of our associated companies* are proudly accredited by the Freelancer & Contractor Services Association (FCSA). The FCSA is a leading professional body that is committed to ensuring the supply chain of temporary workers is ethical and compliant with HMRC rules and regulations. To achieve this prestigious accreditation, all of our companies have undergone comprehensive audits by independent employment and legal professionals.

FCSA accreditation says it all – its members are compliant, ethical and have both your agencies and your candidates’ best interests at heart. Every business under the Churchill Knight Group falls into this category.

Download PDF Guide

Click on the button below to download a PDF version of our MSC and Transfer of Debt Guide – written exclusively for recruitment professionals.

Contact Us

To schedule a meeting at your office, or to find out more information about Churchill Knight and how we can help your recruitment agency remain compliant, please use the form below, or call 0808 2525533.

Why partner with Churchill Knight?

We’re delighted to work with hundreds of recruitment agencies throughout the UK. By partnering with us, you’re teaming up with an accountancy and umbrella company with over 20 years’ experience, and a proven track record. We’ve built a reputation we’re proud of, and you can be assured that your recruitment agency, consultants and candidates will become our priority.

Here are a few reasons why you should contact our friendly team today to arrange a meeting in your office:

We make it our priority to stay up to date with the latest news and legislation affecting the supply of temporary workers. Some of the legislation can be complex (especially IR35), and as a result, our Agency Development Team would be happy to deliver training at your office for Consultants who want to find out more.
We are partnered with IR35 specialists that can help your end-client, and your agency with IR35 assessments, Status Determination Statements, and more.
Churchill Knight has over 20 years’ experience, and we’re proud of the reputation we’ve built.
All your candidates’ payroll requirements are covered – limited company, umbrella, and more. Switching between our services is easy.
We understand no recruitment agency is the same. This is why we tailor our partnerships, ensuring your agency gets what it wants from our professional relationship.
Your candidates are your priority and we respect this. You have our word – they’ll become our priority too. We always go the extra mile to ensure the service we deliver is beyond their expectations.
We acknowledge it’s our responsibility to always be up to date with the latest legislation and to share it with our partners. We frequently run free seminars for our partners and are happy to host training sessions in their offices. If this is something that sounds appealing, please get in contact with us.

This guide is being provided to you solely for your personal information. It is not intended for distribution to the press or any other media and may not be reproduced or redistributed by mail, facsimile, electronic or computer transmission or by any other means to any other person or body without the express written permission from a Director of Churchill Knight & Associates Ltd.

This guide is not a substitute for specific legal, accounting or other professional advice or opinions on related matters and issues that arise and should not be taken as providing specific advice on any of the topics discussed.

The information contained herein has been prepared by using sources believed to be reliable. Whilst reasonable care has been taken to ensure that the facts stated herein are accurate, no representation or warranty, express or implied is made by Churchill Knight & Associates Ltd, with respect to completeness, correctness, reasonableness or accuracy of any information and opinions contained herein.

Without limiting the generality of the foregoing, liability for any negligent or innocent statement or misstatement in respect of the contents of, or any omission from this guide are hereby expressly excluded. Churchill Knight & Associates Ltd has no obligation or liability whatsoever with respect to the information provided or any action or inaction of Churchill Knight & Associates Ltd or the recipient with respect to such information.

* The Churchill Knight Group consists of Churchill Knight & Associates Ltd, Churchill Knight Umbrella, Bluebird Accountancy, Bluebird Umbrella and Umbrella Company UK.