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HMRC internal manual

Employment Status Manual

HM Revenue & Customs
, see all updates

Managed Service Companies (MSC): MSC Legislation and Employment Businesses and Agencies

HMRC recognises that Employment Agencies and Employment Businesses may be concerned that their core business of placing work seekers with end clients may bring them within the scope of the legislation.

Neither Chapter 9 ITEPA 2003 nor section 688A ITEPA 2003 catch Employment Businesses or Employment Agencies carrying on their core business. There are specific exclusions in both sets of legislation for such businesses.

Nor will the legislation be applied to Employment Businesses or Employment Agencies which undertake services which are merely ancillary to the core business.

However, if an Employment Business or Employment Agency:

  • Demonstrably carries on a business of providing structures (companies or partnerships) through which workers provide their services, and provides services to those companies/partnerships to the extent that they would be considered to be “involved” as described in section 61B(2), then that Business/Agency would be a MSC Provider; or
  • Demonstrably acts in concert with a person who is a MSC Provider for the purposes of securing that an individual’s services are provided by a company, then that Business/Agency would be an associate of a MSC (but see preferred supplier list question below); or
  • Demonstrably encourages an individual to operate through a MSC and/or beyond the mere placing of the worker’s company with end clients and functions directly linked to such placing, or is otherwise actively involved in the MSC’s provision of the worker’s services, then that Business/Agency would potentially render itself liable for the transfer of any PAYE/NICs debt of the MSC.