http://www.hmrc.gov.uk/employment-status/msc.htm
The advent in 2007 of the "Managed Service Company Legislation" highlighted the need for Directors running their own limited companies to demonstrate to HM Revenue & Customs (HMRC) that they are genuinely in business on their own account, and their businesses are not influenced or controlled by a third party, such as a service provider or accountant.
In simple terms, the legislation states, that if a service provider/accountant has control and influence over the day to day running of the business and/or over the provision of the services and/or over the finances of the business, then the service provider is an MSC, and is therefore obliged to operate PAYE on all of the income received by your company from your agency, or end client, regardless of your employment (IR35) status.
The effect is that HMRC would demand payment of the shortfall of income tax and NIC from your limited company. If this cannot be recovered from your company, then the shortfall could be recovered from the service provider / accountant, the employment agency or end-client or any other party in the contractual chain.
Not surprisingly both agencies and their clients have been become increasingly nervous about potentially having to pay hundreds of thousands of pounds in unbudgeted costs to HMRC.
e-solo is the perfect solution - e-solo is not an accountancy service provider, it is accounting software and as such is outside the auspices of the Managed Service Company Legislation.
e-solo removes all parties in the contractual chain from the risk of the debt provisions under the Managed Service Company Legislation.
Within the cost of the software is an insurance policy underwritten by Qdos Broker & Underwriting Services on behalf of leading insurer AXA which covers all parties in the contractual chain against the costs of legal and accountancy fees in the event of an HMRC enquiry or dispute.