What exactly is the new April 2007 Managed Service Company legislation which will affect freelancers and contractors?
April 2007 saw the most significant tax changes for contractors since the introduction of IR35 seven years previously. Many contractors had skirted around IR35 by using certain managed service companies. Since 6th April 2007, HMRC has simply taxed and deducted National Insurance Contributions from employees in MSCs. Contractors genuinely in business on their own account and operating through a limited company have nothing to fear. Contractors using reputable umbrella services, with IR35 insurance and operating PAYE are also safe. Anyone using a composite company or any other MSC merely as an intermediary needs to take professional advice immediately.
