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Personal Service Company

Personal Service Company Up until 1999, the majority of contractors worked through their own personal companies exploiting the small salary/ large dividends route available to them. By using this intermediary system of the paying of dividends, contractors were able to escape both NI Contributions and upper rate tax.
In this way, the tax advantages of working through the dividend route far way outweighed any other contracting vehicle, and it is easy to see why most contracting professionals opted for this route.
Sadly with the introduction of IR35, these tax advantages that were previously available have now been removed. It is widely accepted that the vast majority of temporary workers fall within the IR35 web and explains why today, umbrella companies are the vehicles of choice for most freelancers and contractors.
Unfortunately it is a little known fact in contracting circles that HMRC have launched a second purge against companies advocating non-IR35 compliant methods.
With the first wave of purges, contractors has not only been faced with the headache of a HMRC investigations for being under theses schemes, but were also hit with both massive penalties and interest charges for the underpayment of taxes.
This trend is not only likely to continue, but it is going to worsen as HMRC intensify their campaign.
With Atlantic, you get to maximise your take home earnings legally and enjoy a hassle free contracting life as we:
  • remove all the administration hassle
  • remove the need for accountants, tax returns, annual returns and year end accounts
  • remove the pain from dealing with agencies and contracts

A warning from HMRC

In response to the legislation published at Budget, a number of providers are telling their clients that they (the providers) are not MSC providers, rather that they are accountants. They are therefore telling clients that their companies are not caught by the legislation.
Based on the advertising material seen, it is HMRC’s view that many of these organisations are MSC providers as defined in the new legislation. Whether or not the new tax rules apply will depend on the precise relationship between the MSC provider and the client company.
Individuals operating through service companies, particularly those who believe that prior to 6 April they would have been within “IR35”, should consider carefully their and their company’s relationship with the MSC provider. If a service company is within the legislation and the company fails to operate PAYE, this could result in individuals being held personally liable for the PAYE debts of the company.
Source: www.hmrc.gov.uk/employment-status/current.htm