The new Managed Service Company Legislation, announced by the UK Government in the 2007 Budget, is, in our opinion, a time bomb waiting to go off for contractors who continue to operate through their own limited company and use a managed service provider to assist them to administer it.

Due to the vagaries of this new legislation, FPS took the decision to withdraw its accountancy and limited company services so that nobody involved with us would risk financial ruin. Our reputation has been built on providing legitimate and compliant services that don’t place the financial security of our members or their recruitment companies at risk.

The MSC legislation has brought an end to limited company working in the UK for contractors who wanted to share the cost of running a company with other contractors. Moving forward if you want to have your own company then you will need to establish it and manage it yourself, ensure that it conforms to UK company law and engage an accountant to validate that the company’s accounts are managed correctly. All in all it’s a tall order when the majority of contractors work 50+ hours a week. Having been established in the contractor market for two decades we are aware of the time constraints that contractors work under. Running their own company will add pressure to these constraints, and they could find themselves on the wrong side of this legislation in an attempt to keep up with company reporting deadlines. Combined with this is the extra costs they will incur, whilst never being entirely sure if their “accountant” will be deemed a managed service provider and leave them with a large tax bill.

A responsible approach

The MSC legislation is not relevant to our members as they do not operate through their own limited company and their only payment is 100% salary that is subject to full PAYE and National Insurance contributions. We are grown up enough to take the responsible approach to safeguarding the interest of everyone concerned with our company.