Should I trade as a Limited Company, umbrella or composite

[brobi]

“Potentially under challenge are composite companies, umbrella companies, payment split via salary and dividend and payment split via partner dividend, as in the case of Arctic Systems,” explained Roger Sinclair, legal consultant at Egos Ltd."

"However, buried in the Budget’s finer print, the government says any review will accompany new powers to tackle those who hide employment income by drawing dividends, in order to take advantage of the 19 per cent small business tax.

“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.


All of the above is taken from the same document you posted and this scheme is none of these. Also it's not controlled by the UK government but more on the double taxation treaty. In fact the IR uses a similar scheme themselves so it APPEARS for the moment, they wouldn't close this.

Bring back the tories!!!

[brobi]

"it should not change anything for us because of the treaty in IoM
it seems that the corporate tax & NIC are going to decrease slightly, it's good to have a ltd as contractor anyway "

So that clears that up for the moment. I know these things are changing and I also know that they keep abreast of the changes that come to them by way of the Inland Revenue themselves and not the Contractor UK site.

Not knocking the site or the info because the more differences of opinion and information we have hopefully a more understood "what we can and cannot do" comes from it.

[malvolio]

No, that's not the relevant bit of Government thinking. What you need to worry about is 5.86 of the last PBR:

The Government believes that all individuals and businesses must pay their fair share of NICs and tax, irrespective of legal form. It will continue to review the tax and NICs systems to ensure that this is the case and will bring forward proposals for discussion that are consistent with simplicity for compliant businesses, support for businesses in their aspirations to grow and maintaining the attractiveness of the UK as a business location.

There's that 'fair' word again. The intention is clearly that if you have income in this country, regardless of source, you pay UK levels of tax. Now that is the case right now, supposedely, so I wonder why they found it necessary to-re-emphasise this point?

[djfoot]

Originally Posted by brobi

Bring back the tories!!!

Only if they scrap IR35 outright and let things return to normality...

[mankiemogwai]

I posted this on this thread once before but it seems to have got lost...

I felt the best option was to avoid Umbrellas/composites and alike (based on the above nightmare stories) so I looked in to having my own Limited company run by someone else and came across this bunch - www.cakeincome.co.uk
.... it is working well for me!

[DaveB]

Originally Posted by mankiemogwai

I posted this on this thread once before but it seems to have got lost...

I felt the best option was to avoid Umbrellas/composites and alike (based on the above nightmare stories) so I looked in to having my own Limited company run by someone else and came across this bunch - www.cakeincome.co.uk
.... it is working well for me!

[Pondlife]

Originally Posted by mankiemogwai

I posted this on this thread once before but it seems to have got lost...

I felt the best option was to avoid Umbrellas/composites and alike (based on the above nightmare stories) so I looked in to having my own Limited company run by someone else and came across this bunch - www.cakeincome.co.uk
.... it is working well for me!

Smells like

Edit: Damn! Would have been quicker but I only use two fingers to type.

[HStanton]

Hi all, first time poster, long time reader.

Work for an accountancy myself, won't mention the name.

The real problem with composite's now isn't to do with IR35 it's to do with associated companies.

As you all know, small companies CT is 19%, large companies is 30%. Composites will claim that each ltd company under it is a seperate entity and so it's turnover qualifies for small CT. However the gov has argued successfully twice last year and twice more again this year that all of the ltd companies under the composite are associated because the comp is in control of accounts. Hence the total turnover is vast and qualifies for large CT.

We took on two guys who were personally liable for £15k in backtaxes due to the 11% shortfall.

[malvolio]

Now that's an interesting comment. And could be interesting if followed to a conclusion - what's the potential tax take on 30,000 users of composites underpaying by 19%, back-dated to December 2004... roughly £950m?

I can see the headline now - "Brown initiative recovers £1bn in unpaid taxes". Anyone would think there's an election coming up.

[academic]

Hi,

I am moving into contracting world. Have two options , start my own Limited or join with a friend of mine as director( he doesn't have one , we want to register it together). I understood from this post that HMRC targets composite companies than own Limited companies.

When is a company called as composite ?? When my self and my friend start a company and we both are directors , is that called a composite.?? Or a group of people...

My wife will be secretary & his wife as another employee..

I want to take a decision based on your opinion.


Thansk in advance for your answers.

Thanks,
Academic