PBR: Managed service companies – first in the firing line! By Rebecca Benneyworth
There was a clear indication in the Budget 2006 publications that tax motivated incorporation was still an issue for Government. The Red Book included an analysis of the issue at paragraph 5. 85 and indicated that steps would first be taken against managed service companies :
”5.85 Since the Pre-Budget Report, further evidence has emerged that employment income is being disguised as dividends in order to take advantage of the small companies’ tax rate, often encouraged by promoters of mass-marketed managed service company schemes.