2007 No. 2070
The Social Security Contributions (Managed Service Companies) Regulations 2007
Made
Laid before Parliament
Coming into force
The Treasury and the Commissioners for Her Majesty’s Revenue and Customs make these Regulations.
The powers exercised by the Treasury are those conferred by section 4A, 122(1) and 175(1A) of the Social Security Contributions and Benefits Act 19921 and sections 4A, 121 and 171(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 19922.
The powers exercised by the Commissioners for Her Majesty’s Revenue and Customs are those contained in section 8(1)(m) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 and Article 7(1)(m) of the Social Security Contributions (Transfer of Functions, etc.) (Northern Ireland) Order 19993 and now exercisable by them4.
The Secretary of State and the Department for Social Development5 concur in the making of these Regulations.
Citation and commencement1
These Regulations may be cited as the Social Security Contributions (Managed Service Companies) Regulations 2007 and shall come into force on 6th August 2007.
Interpretation2
1
In these Regulations “ITEPA” means the Income Tax (Earnings and Pensions) Act 2003, and the following expressions have the same meaning as they have for the purposes of Chapter 9 of Part 2 of that Act—
“associate”;
“managed service company”;
“payment or benefit”;
“worker”.
2
In these Regulations—
“attributable earnings” has the meaning given by regulation 3(2);
“secondary Class 1 contributions” has the meaning given by section 6 of SSCBA;
“secondary contributor” has the meaning given by section 7 of SSCBA;
“SSCBA” means the Social Security Contributions and Benefits Act 1992;
“SSCR” means the Social Security (Contributions) Regulations 20016.
3
In the application of these Regulations to Northern Ireland a reference to an enactment applying to Great Britain is to be read as a reference to the corresponding enactment applying in Northern Ireland.
Payments and benefits received by workers treated as earnings3
1
This regulation applies if—
a
the services of an individual (“the worker”) are provided (directly or indirectly) by a managed service company (“the MSC”),
b
the worker, or an associate of the worker, receives (from any person) a payment or benefit which can reasonably be taken to be in respect of the services, and
c
the payment or benefit is not earnings derived from an employed earner’s employment of the worker with the MSC.
2
Where this regulation applies, the MSC is treated as making to the worker, and the worker is treated as receiving, a payment or benefit which is to be treated as earnings from an employed earner’s employment (“the worker’s attributable earnings”).
3
The amount of the worker’s attributable earnings comprised in any payment or benefit is computed in accordance with section 61E of ITEPA7.
4
The time at which a worker is treated as receiving that payment or benefit is determined in accordance with section 61F of ITEPA8.
5
The worker’s attributable earnings shall be aggregated with any other earnings paid to or for the benefit of the worker by the MSC in respect of the earnings period in which the payment or benefit mentioned in paragraph (1)(b) is received by the worker, and the amount of contributions shall be assessed in accordance with the appropriate earnings period determined in accordance with regulations 3 to 6 of SSCR9.
6
Any issue whether the circumstances are such as are mentioned in paragraph (1) is an issue relating to contributions that is prescribed for the purposes of section 8(1)(m) of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (decision by officer of Revenue and Customs).
Deemed employed earner’s employment4
Where regulation 3 applies—
a
the worker is treated, for the purposes of Parts 1 to 5 of SSCBA, and in relation to the worker’s attributable earnings, as employed in employed earner’s employment by the MSC, and
b
the MSC, whether or not it fulfils the conditions prescribed under section 1(6)(a) of SSCBA for secondary contributors, is treated for those purposes as the secondary contributor in respect of the worker’s attributable earnings,
and Parts 1 to 5 of SSCBA have effect accordingly.
Amendment of SSCR5
In regulation 1(2) of SSCR (interpretation) in the definition of “secondary contributor” for “a second Class 1 contribution” substitute “a secondary Class 1 contribution”.
The Secretary of State of concurs.
Signed by authority of the Secretary of State for Work and Pensions
The Department for Social Development concurs.
The Official Seal of the Department for Social Development is affixed on the 24th July 2007.
John O’NeillA Senior Officer of the Department for Social DevelopmentDave HartnettSteve LameyTwo of the Commissioners for Her Majesty’s Revenue and Customs(This note is not part of the Regulations)