Skip to main content

Glossary

Not sure what all those confusing terms and phrases mean? Let our jargon-buster explain...

A firm of accountants offering a wide range of services to assist in the running of your business. Typical services include accounting, book-keeping, VAT, payroll processing, completion of management accounts and tax returns, legal services and data entry. Look for an accountancy services provider with experience of working with contractors and with qualified accountants amongst its team.

The collation of financial information for interested parties about an organisation's financial performance, assets and liabilities.

The recording of the financial accounts of an organisation. These accounts may be recorded manually or stored electronically on a computer system.

Unfortunately anyone can call themselves an accountant. There are however a number of recognised qualifications: ATT, ACA, CIMA and ACCA are all examples of recognised accounting bodies and a true accountant will be a member of one of these bodies.

A tax on the profits of UK-based companies and organisations.

The total amount earned, before employee's NICs, PAYE and other deductions.

Her Majesty's Revenue and Customs, formerly known as the Inland Revenue and HM Customs and Excise which are now a single body.

The tax levied on monies received by an individual during a tax year from earnings, investments and profits.

A legal structure where the shareholder is protected from any liabilities the company may incur.

Essentially, an MSC is a company which provides the services of an individual and is controlled or unduly influenced by someone other than that individual who is the director and shareholder. In summary, the MSC legislation gives teeth to Treasury's traditional view that if you take advantage of the tax benefits of working through a limited company you must be genuinely in business, taking business risks and making business decisions; no one else can do this for you. 

It is however perfectly acceptable for you to seek the advice of an accountancy service provider, like PayStream. In fact it is the sensible thing to do. To give our clients comfort we have been audited by Professional Passport and BDO LLP for compliance with MSC legislation.

If you are concerned that your current accountancy service provider is in breach of MSC legislation, please contact us immediately and let us tell you about our compliant services.

The HMRC tax legislation which seeks to ensure individuals are not disguised employees of the end client, simply by using an intermediary company, commonly a Personal Service Company (PSC), to provide the worker. Individuals within IR35 are effectively in deemed employment and must therefore be paid salaries subject to PAYE and NICs. Individuals outside IR35 can elect to receive their remuneration as a mix of salary and dividends.

The remaining amount of income after employee's National Insurance, PAYE and other deductions have been made from your salary.

National Insurance Contributions.

The HMRC (Expenses and Benefits) form that is filled in by UK employers for each director and employee earning over £8,500 per annum, detailing any expenses and benefits in kind received by the employee.

Pay-as-You-Earn, the payroll deduction system whereby income tax is deducted from an employee's salary. The amount deducted is established by their tax code and is designed to try to collect the correct amount of tax over the tax year.

Value Added Tax, the charge levied on the final consumption of goods and services.

These companies contain from one to an unlimited number of contractors who are all employees receiving a salary and paying PAYE and NICs on all earnings. For those contractors where there is no supervision, director or control, some expenses are tax deductible. Contractors are not directors or shareholders so cannot receive dividends.