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Friday, 30th March 2007: In a ground-breaking survey of its readership, independent resource site ContractorCalculator has learned that far too many contractors are not prepared for the changes that the new Finance Law, which goes into effect on 6th April, inaugurates.

Responses from nearly 300 contractors show some surprising results. Despite the site’s regular discussion of the issue of managed service companies and composite companies, far too many contractors simply don't understand the legislation, or are not prepared to make the changes they need to make.

• Only 51% of contractors run a limited company
• 29% are using composite companies
• 56% of those affected say they don't know what to do

Says Dave Chaplin, CEO of “April 6th is not far off. If contractors opt for a limited company - which should be the only logical choice for contractors who pass IR35 - then they should realise that setting up a company, especially a company bank account and VAT number, takes time and so they need to take action NOW.''

The risk of acting without a full understanding of the issues is considerable, because a contractor could wind up losing a sizeable percentage of income, or falling into non-compliance.

A calculator dedicated to this issue can be found at


Privately owned and run by a team of existing and former contractors, is the most popular internet resource for UK contractors. Its range of calculators for contractors and permanent employees can be used for a variety of tasks from calculating taxes and net pay through to comparing contract rates and effects of IR35. In addition to the calculators it contains the most extensive knowledge base of information for first time and existing contractors.

Thanks to the site’s specially tailored content and services, traffic volumes have grown every year since the site went live, and this trend is continuing. Currently each month the site receives 65,000 unique visitors and serves over 400,000 pages. The network of links with other related sites and the unrivalled exposure in the search engines means that the site continually attracts new visitors.

There is an extremely healthy balance of unique and returning visitors thanks to ContractorCalculator’s exclusive combination of impartial calculators and authoritative content. No other independent site can match its ‘one-stop-shop’ proposition.


What is an MSC?

A Managed Service Company, in the context of the definitions defined in the December 2006 Pre-Budget Report, refers to a service company that provides contractors with a composite company solution to manage their invoicing and accounting. In a composite company scheme, typically up to 20 contractors become non-director shareholders and the scheme provider manages the company. The contractors are then paid a low salary plus dividends in addition to claiming various expenses allowable under the corporate structure.

This method of payment provides many financial benefits, since it avoids large amounts of National Insurance and income tax that would otherwise be payable if the contractor was paid entirely by salary. However, for a contractor to use a composite scheme they must lie outside IR35 legislation.
What is IR35?

Announced in 1999, ‘IR35’ is a piece of tax legislation which allows the Inland Revenue to tax some contractors as though they are employees of their clients. Contractors caught by IR35 pay significantly more tax, reducing their take home pay by up to 25%.


Dave Chaplin, CEO, ContractorCalculator
Office: 0871 218 5152; Mobile: 07990 525790 or

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