Tackling Managed Service Companies

Introduction

On the 6th of December, Gordon Brown released his Pre-Budget Speech which promised to crack down on“ Managed Service Companies” known in the industry as Composite Companies. This proposed legislation can be viewed as a second attempt by the Chancellor to get those in the contracting market that use incorporation for tax avoidance purposes to pay “employed levels of tax and NIC’s”.
 
In what is an admission from HMRC (and common knowledge anyway), the Intermediaries Legislation (known by contractors’ as IR35) has on the whole failed to level the playing fields in the industry, and to date there have been many representations to government from compliant operatives, such as Atlantic Umbrella Company.

With their members’ escaping employed levels of taxation, Composite Companies have become very popular in the industry and have grown exponentially in the last few years, to the point that they are now seen by the Chancellor as a risk to the Exchequer.

Who will be affected?

The paper goes to great lengths to identify those who will be affected by the proposed legislation, and what becomes very apparent is that the users of Composite Companies and managed personal service companies as well as the administrators of such schemes will bear the brunt.

Is Atlantic Umbrella affected?

Atlantic is a PAYE Umbrella Company that provides professional employment services in a manner that is legally compliant.

We do not (and have never) pay dividends nor encourage the abuse of the expenses system. We have in place an expenses dispensation, which HMRC have confirmed will remain at our disposal.

With Atlantic, it is business as usual.