# The Social Security Contributions (Managed Service Companies) Regulations 2007, Note: Explanatory note


(This note is not part of the Regulations)
These Regulations make provision about payments and benefits received by workers whose services are made available to clients by means of managed service companies (“MSCs”). Chapter 9 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) is inserted by paragraph 4 of Schedule 3 to the Finance Act 2007 (c. 11)). Chapter 9 makes new provision about the treatment of such payments and benefits for tax purposes. These Regulations also make a correction to the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004).
Regulation 1 provides for citation and commencement, and regulation 2 defines and explains the application of certain terms used in the Regulations.
Regulation 3 provides that payments and benefits which are treated as employment income for the purpose of Chapter 9 are treated as earnings from an employed earner’s employment with the MSC, and that their amount is computed in the same way as for tax purposes. Paragraph (5) of that regulation provides for the aggregation of the amounts treated as earnings with any earnings actually received from the MSC in connection with an employed earner’s employment with them. Paragraph (6) prescribes questions under paragraph (1) for the purposes of section 8 of the Social Security Contributions (Transfer of Functions, etc.) Act 1999(c. 2) and Article 7 of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 1999 (S.I. 1999/671) as questions relating to contributions which fall for determination by an officer of Revenue and Customs.
Regulation 4 provides that, where regulation 3 applies, the worker is treated for the purposes of Parts 1 to 5 of the Social Security Contributions and Benefits Act 1992 (“SSCBA”), and in relation to the attributable earnings as if employed in an employed earner’s employment with the MSC, and the MSC is treated as the secondary contributor for the purposes of Class 1 National Insurance contributions, regardless of whether it would otherwise be by virtue of section 1(6) of SSCBA.
Regulation 5 corrects a typographical error in the definition of “secondary contributor” in the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004).
A full Regulatory Impact Assessment in respect of the proposals on managed service companies was published by HM Revenue and Customs and is available on their website at www.hmrc.gov.uk/ria/full-ria-man-serv-coys.pdf or from the Ministerial Correspondence Unit, HM Revenue and Customs, Yorke House, Castle Meadow, Nottingham. It is also annexed to the Explanatory Memorandum to the Income Tax (Pay as You Earn) (Amendment No. 2) Regulations 2007 (S.I. 2007/2069) which is available alongside those Regulations on the OPSI website.

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Source: https://www.legislation.gov.uk/uksi/2007/2070/note (the official version)
Page: https://openlegislation.uk/social-security-contributions-managed-service-companies-regulations-2007/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.