HM Treasury

Consultations & legislation

Tackling Managed Service Companies

06 December 2006

The Government is today announcing action to tackle Managed Service Company (MSC) schemes. Personal Service Companies will not be within the scope of these measures with the Intermediaries legislation remaining in place as at present. These measures are explained in detail in the consultation document, Tackling Managed Service Companies, published today alongside the 2006 Pre-Budget Report, which also sets out the draft legislation and questions for consultation.

At Budget 2006 the Government announced that it would respond to evidence of significant growth in MSC schemes which are used to avoid paying employed levels of tax and NICs. There are existing rules - the Intermediaries legislation - to ensure that the correct tax and NICs treatment is applied, but these rules are, in many cases, not being followed by MSCs. This gives them an unfair competitive advantage over compliant businesses and workers. In addition some workers are entering MSC schemes without understanding that they may be giving up employment rights.

Chapter 6 of the consultation document summarises the questions for consultation and the draft legislation is set out in Annex B.

FAQs explaining who is within the scope of the measures are also published.

Update: 10 July 2007

Draft legislation to allow the PAYE debts of MSCs to be transferred to appropriate third parties was published for comment on 6 February 2007.

A summary of consultation responses on the secondary legislation relating to the transfer of PAYE debts is published today. This sets out how the regulations have been modified to take account of those responses. The revised regulations have been published today by HM Revenue and Customs at

A summary of responses to the primary legislation included in the consultation documents published on 6 December 2006 and 6 February 2007 was published at Budget 2007: Tackling Managed Service Companies: summary of consultation responses.

The documents are available below in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.

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