MSC LEGISLATION EXPLAINED

​The MSC legislation, which has been in power since Apr 2007, was introduced in an attempt to reduce the "unfair aggressive advantage" compared to "compliant companies and workers." MSC's and MSCP's are restricted to the legislation but in themselves are very different (as you will see in the area named 'Detailed HMRC Explanations & circumstances of the MSC legislation/MSC's and MSCP's').
Definition: Handled Support Organizations (MSC)
For the MSC legislation to apply, the company through which the staff member provides their alternatives to End Customers would need to be described as an MSC. The phrase an MSC is included within the complete legislation papers and is based on four conditions:
 Their company comprises mainly of providing the alternatives of people third parties;
 The individual gets costs that signify the most of the charges obtained by the service company;
 Had all the installments been exposed to PAYE, the transaction would have been higher than what it is now; and...
 an MSCP is involved with the company
All four circumstances must be pleased for the company to be regarded as an MSC...
These are mentioned in depth in the area named 'Detailed HMRC Explanations & circumstances of the MSC legislation/MSC's and MSCP's.'
Definition: Individual Support Company (PSC)
Personal Support Organizations (PSC's) are owner managed companies. They are usually set up with one home and one investor paying a minimum wage and benefits. The home, often the specialist, is mainly accountable for finishing all the appropriate tax and VAT profits as well as all other management responsibilities regarding the company. The PSC would raise a bill to the agency/End Customer, and it would be for the home to ensure transaction and any financial debts are gathered.
Each new agreement task would have to be examined according to the HMRC rules, and in the most of the cases, a CPA or tax consultant would need to be involved in helping perform the agreement and working practice research and final presentation.
Definition: Handled Support Company Company (MSCP)
An MSC Company is based on HMRC as "an individual that keeps on a company of advertising or assisting the use of companies to deliver the alternatives of people and is involved with the company. "In this perspective, 'person; has a company, collaboration along with.
Being an MSCP does not in itself mean that the provider (person or business) is an MSC or that the MSC legislation is applicable. The acid test is about being 'involved' with the company and be in the 'business of advertising or assisting the use of companies to deliver the alternatives of people's. HMRC has recognized five ways in which may be 'involved' (see an area named features of an MSCP on the next page).
Definition: Handled Support Organizations Legislation
The legislation believes that all costs obtained by 'an employee involved by an MSC' to be career earnings. This would mean that PAYE (including reductions in tax and NIC) must be used to all gained earnings.
January 2008 introduced into power the complete conditions of the 'Transfer of Third Celebration Debt' rules. This means that where an MSC is not able to pay the PAYE tax and NIC obligations, its debts can be used someone else, such as the Organization or the End Customer involved with the assisting or advertising of such companies.
As a result of these rules, Organizations and End Customers must be clear as to their inner procedures and their understanding associated with using "limited company contractors" whether through the use of PSC's, or some of the other non-certified managed alternatives that are currently available to companies.
So in conclusion, it is important for an Organization or End Customer to be able to determine whether:
A company they wish to use is an MSC by examining the four conditions;
 Their company comprises mainly of providing the alternatives of people third parties;
 The individual gets costs that signify the most of the charges obtained by the service company;
 Had all the installments been exposed to PAYE, the transaction would have been higher than what it is now; and.
 An MSCP is involved with the company.
Detailed HMRC definitions & circumstances of the MSC legislation/MSC's and MSCP's.
Characteristics of an MSC - all four circumstances must be met before the company is regarded as an MSC.
 Their company must include completely or mainly of offering (directly or indirectly) alternatives of a person to 3rd party clients;
 The individual (worker) or an affiliate of the individual providing their alternatives to the 3rd party client gets costs (directly or indirectly) from the service company 'equal to the largest part of the amounts obtained by the service company from the Customer for the alternatives provided by the worker';
 The prices (net of tax and national insurance) obtained by the staff member (or associates) are higher than they would have obtained if all the installments (net of tax and national insurance) were handled as career earnings of the staff member about a career with the service company; and.
 An MSCP is involved with the company.
Exemptions
HMRC's presentation, one that they have openly talked, is that outdoor umbrella information mill NOT MSC's because condition three above would not be met. Workers of the outdoor umbrella company are employees and receive their wage net of tax and nationwide insurance policy and permitted costs.
The amount obtained from the outdoor umbrella company is the same as would have been obtained straight from any other company that the staff member would function through and which would cure all costs as career earnings.
Characteristics of an MSCP
An MSCP is determined as a "person who keeps on a company of advertising or assisting the use of companies to deliver the alternatives of people, is involved with the company." It is the term "involved" that has created much misunderstandings and concern. The assistance makes mention of one of five actions that can be considered as 'involved':
1. Benefits economically on a continuous basis from the supply of the alternatives of an individual;
2. Impacts or manages the supply of those services;
3. Impacts or manages the way in which costs to the individual (or affiliates of the individual) are made;
4. Impacts or manages the company's financial situation or any of its activities; or
5. Gives or encourages a challenge for making good any tax loss.
An MSCP contains an individual (or organization) who encourages a product (such as a PSC) to deliver the alternatives of people (contractors) and to assist in the handling of those companies (PSC's) or offering alternatives for making the use of those companies (PSC's) easier.
Exemptions
There are some specific companies and those who are not considered to be MSCP's:
 Individuals expertly certified and controlled by a regulating body
Training providers
A chartered secretary
A career company putting work seekers
 Company development agents
A firm of accounting firms or tax advisor's (practicing)
 A trade association