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IR35 & MSC Legislation

IR35 Compliance & MSC Legislation

You’ve probably heard of IR35 Legislation and may have been thoroughly frightened by it. But relax, because it’s just a term that describes a regulatory change by HMRC that took place in April 2000. HMRC introduced Intermediaries Legislation, commonly known as IR35, to prevent contractors from working as what HMRC saw as disguised employees’ people who were getting away with paying less tax and National Insurance than they should. Before IR35, both contractors and freelancers could reduce their tax and National Insurance liabilities by receiving payments in the form of dividends. Today it is still possible to minimise your liabilities, within the law, by working for an umbrella payroll company like MSL Forza.

A few years later, in April 2007, further legislation was introduced to make managed service companies (MSCs) illegal. MSCs were a third party service provided by intermediary companies that again paid their contractors through dividends instead of salaries. If you join MSL Forza you will not be affected by this legislation as we operate fully under HMRC’s PAYE system.