Offshore Companies

The definition of an offshore company encompasses many organisations and individual arrangements but if you work in recruitment in the UK you probably define the term as a company that is based outside of UK tax jurisdiction (like the Isle of Man), that receives a temporary workers gross wages, deducts a fee (usually 5% of gross) and then simply sends the rest to the worker. The worker is supposedly responsible for paying tax and is classified as self employed.

Are offshore companies MSC? 

In the MSC guidance it quite clearly states:

Where the worker is resident in the UK and the work is undertaken in the UK, the MSC is treated as having a place of business in the UK, whether or not it in fact does so. This means that the MSC must apply the new legislation.

If under these circumstances the MSC fails to operate the MSC legislation, HMRC will seek to transfer the PAYE and NICs payable to other persons resident within the UK as set out in the transfer of debt provisions.

Those persons who encourage or are actively involved with Managed Service Companies....... inevitably run a higher risk of having the company's PAYE and NICs transferred to them under the transfer of debt provisions.