Definition of managed service companies

A managed service company (MSC) is an intermediary company through which workers provide services to an employer or agency. In contrast to the ‘IR35’ situation the worker does not exercise control over the MSC, which is instead administered by a third party provider.

If caught by the legislation, PAYE and NIC applies to all payments (including dividends) made by the MSC to the worker. Where the PAYE and NIC is not withheld correctly, HMRC can transfer the outstanding PAYE and NIC debt, in certain circumstances, to others within the engagement chain, such as a third party provider, the agency or end user. See also IR 35. [1]

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