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What are managed service companies (MSCs)?

Many people supply their services to clients, not directly as a self-employed person, but via a company, known as a personal service company (PSC). The tax and NIC advantages of this way of working are significant. See the Off-payroll working (IR35) for small clients ― overview guidance note. Where a PSC is owned by the individual worker, it is likely to be caught by the off payroll working legislation, commonly known as IR35. In the years following the introduction of that legislation, a number of providers began to offer PSCs to a wide range of individuals. These providers usually supplied the workers with a contract with clauses designed to avoid IR35, whilst still delivering many of the benefits of a PSC.

The providers also dealt with the onerous elements of running a company, such as calculating PAYE, profits and dividends, and dealing with both Companies House and HMRC. Companies with external providers who supplied these all-encompassing services became known as MSCs, in contrast to PSCs where it is the individual who runs