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KembaraXtra – Legal Terms – Managed Service Company
A managed service company is a company primarily established to provide the services of an individual, often in a way designed to reduce tax liabilities.
Instead of receiving ordinary salary payments, individuals connected with such companies may receive dividends or expense payments. Tax authorities introduced rules to prevent misuse of these arrangements.
Since reforms introduced by the Finance Act 2007, most payments made by managed service companies are treated similarly to employment income for PAYE purposes.
The legislation was aimed particularly at arrangements designed to avoid income tax and National Insurance contributions through artificial corporate structures.
A managed service company is a company primarily established to provide the services of an individual, often in a way designed to reduce tax liabilities.
Instead of receiving ordinary salary payments, individuals connected with such companies may receive dividends or expense payments. Tax authorities introduced rules to prevent misuse of these arrangements.
Since reforms introduced by the Finance Act 2007, most payments made by managed service companies are treated similarly to employment income for PAYE purposes.
The legislation was aimed particularly at arrangements designed to avoid income tax and National Insurance contributions through artificial corporate structures.
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