• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

newbie tax question

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    #21
    Originally posted by malvolio View Post
    Because they're saying it to people who are paying them to say it? If there is any doubt at all, of course they will favour the interpretation their client wants to hear, that way they get repeat business and protect their backs. It's only if there is no ambiguity at all that they will say no.

    At the end of the day, it's only an opinion, it has no existence in law until it is challenged in court and found to be correct or not. At which point all previous opinions will be rapidly withdrawn or re-stated.

    HTH
    With respect Mal lots of people on here said EBT's were not legal and should be avoided like the plague despite case law saying otherwise, the same people are saying it about SEBT's and I havent seen any apologies from anyone who was very clearly wrong about EBT's. If some contractors had listened to some of the posters on here and not gone with an EBT scheme they could be down thousands, it would seem the industry bods, opinion providers and scheme providers are 1 up in the credability stakes.

    HTH

    Comment


      #22
      Originally posted by malvolio View Post
      Because they're saying it to people who are paying them to say it? If there is any doubt at all, of course they will favour the interpretation their client wants to hear, that way they get repeat business and protect their backs. It's only if there is no ambiguity at all that they will say no.

      At the end of the day, it's only an opinion, it has no existence in law until it is challenged in court and found to be correct or not. At which point all previous opinions will be rapidly withdrawn or re-stated.

      HTH
      Ditto
      Connect with me on LinkedIn

      Follow us on Twitter.

      ContractorUK Best Forum Advisor 2015

      Comment


        #23
        Originally posted by geoff from contracta IOM View Post
        The actual difference in available funds between Ltd. Co. and the scheme I represent would be a minimum of 16K on 100K per year it is this large benefit that attracts our clients, we have some clients on 300K PA so the difference to them is about 55K in available funds
        16k would be worth worrying about, but the difficulty I see is that the only way to find out what you would do for me is to pay someone for giving me an approximate version and saying "trust me, it's OK" (quoting an earlier post):

        Originally posted by geoff from contracta IOM View Post
        If you are seriously considering a scheme find one that has been audited by a chartered tax adviser or accountant who know the field there are some documents such as the legal opinion that you cannot see personally but we personally have given some professionals access to all the relevant information subject to some tight controls and they can then prepare a report for clients based on what they have seen, I think it costs about 150 pounds for the report but would definitely be money well spent if it keeps you out of trouble further down the line.
        I foresee some difficulties here: i) I need to trust some professionals chosen by you, ii) they were not necessarily given the full facts, and iii) you had the option of not disclosing their existence if their opinion was in any way negative.

        So I guess the question is this. I am allowed to understand what you would do for me and obtain independent advice?

        Comment


          #24
          Originally posted by acitizen View Post
          16k would be worth worrying about, but the difficulty I see is that the only way to find out what you would do for me is to pay someone for giving me an approximate version and saying "trust me, it's OK" (quoting an earlier post):



          I foresee some difficulties here: i) I need to trust some professionals chosen by you, ii) they were not necessarily given the full facts, and iii) you had the option of not disclosing their existence if their opinion was in any way negative.

          So I guess the question is this. I am allowed to understand what you would do for me and obtain independent advice?
          The professionals carry PI insurance ! You can choose anyone you wish so long as they agree to our terms for providing them with sight of certain documents ( this is commercially sensitive after all ) you will pay a lot more for someone to audit it from scratch for you as opposed to paying for a copy of a report previously produced but we have no issues with CTA's or accountants examining our scheme in intricate detail subject to the conditions I have already mentioned. There seems to be some perception that scheme providers have something to hide for the reputable ones this is not the case only that we don't want sensitive info thrown out into the public domain we did pay tens of thousands for the IP in the first place and we have already seen a surge of copy cat providers enter the market, i'm not sure if they all work but I'm not going to give them our IP to tighten their solution with money we have outlaid.

          Comment


            #25
            Originally posted by geoff from contracta IOM View Post
            With respect Mal lots of people on here said EBT's were not legal and should be avoided like the plague despite case law saying otherwise, the same people are saying it about SEBT's and I havent seen any apologies from anyone who was very clearly wrong about EBT's. If some contractors had listened to some of the posters on here and not gone with an EBT scheme they could be down thousands, it would seem the industry bods, opinion providers and scheme providers are 1 up in the credability stakes.

            HTH
            The world is changing. That may well have been the case but as of now, it is getting increasingly unsupportable. After all, you wouldn't be moving to SEBTs if EBTs were still a valid solution. And your supporting opinon stopped having any value as soon a the revised EBT legislation came into effect, didn't it...

            I have no beef either way with the concept of tax avoidance to the nth degree. I am concerned, however, about people such as the OP who actually have little if any idea of the complexities and realities of the whole taxation landscape picking up the one message that "doing this saves you thousands" without fully understanding the potential issues (not risks, issues) that surround it. You may well spell them out in great detail, but many of your competetors don't and nor does any of the associated advertising.
            Blog? What blog...?

            Comment


              #26
              Originally posted by acitizen View Post
              So I guess the question is this. I am allowed to understand what you would do for me and obtain independent advice?
              I'm sure geoff and the other scheme providers will give you the full details if you contact them directly, it's then up to you. We've had people with us for the last 6 years, many of whom have saved many tens of thousands of pounds. EBTs were shut down, and existing case law is such that the chances of EBTS ever being attacked retrospectively is pretty well zero, despite what people on here, some of whom have their own vested interests, would have you believe.

              Comment


                #27
                Originally posted by ASB View Post
                As I said previously, don't think tax. Think NI.
                Many thanks for the clear explanation. The question that remains is why would anyone bother to set up a company solely to avoid class 2 and class 4 NI when the cost of doing so is a sizeable proportion of the saving, and there is a risk of life-changing harassment by the HMRC?

                Comment


                  #28
                  Originally posted by acitizen View Post
                  Option 2: Put it in the self-employment pages on the tax return. The income tax liability will remain the same, but now there is more NI to pay. This is £130 for Class 2, £3172 for C4 in the band between approx 7k and 42k, and finally £1150 for C4 NI on the profit above that. So £4452 extra overall (?)

                  Is the maximum possible difference between the options £4452-£612=£3839, and realistically about £2000 after paying the accountants and other costs?
                  Unfortunately this option will not be available - it is not possible to work as self-employed in this business (it's a long story but basically noone is going to employ you as an individual on that basis).

                  So your options are

                  1. Owner and Director of a Limited Company and take dividends.

                  2. Full PAYE through either your own company or an Umbrella. This will cost you both Employee and Employer National Insurance which will end up costing much more than your self-employed calculation above.

                  3. Some other scheme as debated at length already in this thread. It's your decision on the merits versus the risks of those.

                  Comment


                    #29
                    Originally posted by Gonzo View Post
                    Unfortunately this option will not be available - it is not possible to work as self-employed in this business (it's a long story but basically noone is going to employ you as an individual on that basis).

                    So your options are

                    1. Owner and Director of a Limited Company and take dividends.

                    2. Full PAYE through either your own company or an Umbrella. This will cost you both Employee and Employer National Insurance which will end up costing much more than your self-employed calculation above.

                    3. Some other scheme as debated at length already in this thread. It's your decision on the merits versus the risks of those.
                    For completeness, I use Option 4: I contract through my own LLP. Slightly higher taxation than a Ltd Co way of working on full tax efficiency but no corp tax, no PAYE, no employers NI just straight taxation against net profits. (Note: there's a vast difference between a LLP where you're a genuine owner of a small company and a LLP set up as an offshore tax avoidance measure)

                    Comment


                      #30
                      Originally posted by malvolio View Post
                      After all, you wouldn't be moving to SEBTs if EBTs were still a valid solution. And your supporting opinon stopped having any value as soon a the revised EBT legislation came into effect, didn't it...
                      Well, laws change, that affects every single business in the country at some point or other. I think the pertinent thing here though is that despite all the dire warnings, EBTs were shut down, with no mention of retrospective action.

                      Comment

                      Working...
                      X