Managed service company

In the United Kingdom, a form of company structure has evolved known as a managed service company (MSC). Largely born from the IR35 legislation in 1999 which came into force in 2000, this form of corporate structure places workers and contractors typically into a group of between five and eight people as shareholders in a limited company owned and run by the service provider. Sometimes the workers will be appointed as directors but always shareholders. As shareholders they can then receive minimum salary payments and the balance of income as dividends. Usually the service provider would perform administrative and company secretary duties and offer basic taxation advice.

These forms became popular with independent contractors and were used as a way of earning high net returns (up to 85% of gross) compared to PAYE, with little corporate responsibilities. In return, the providers charge a fee for delivering the service. To work within this form, workers must usually pass IR35 tests to ensure they are able to take dividend payments.

Managed services

Managed services is the practice of outsourcing day-to-day management responsibilities and functions as a strategic method for improving operations and cutting expenses.

Although the terminology varies, typically the person or organization that owns or has direct oversight of the organization or system being managed is referred to as the offeror, client, or customer; and the person or organization providing the managed service is the service provider or Managed Services Provider (MSP).

Generally the client remains fully accountable for the overall management and control of the organization or system - including the functionality and performance of the managed service.

A very wide range of services can be managed in this way, including: HR-activities, production support, computer and IT systems.

Common managed services

Common managed services include but are not limited to: