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If it seems to good to be true............80%-90% take home

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    If it seems to good to be true............80%-90% take home

    Despite huge rafts of Government legislation dealing with tax avoidance we still seem to have lots of people posting on here who have been tempted by the promise of high take home pay with little or no risk and the backing of QC's. The scheme providers are often very convincing and are marketed to appeal to new contractors who have little or no understanding of the UK tax system and the risks that they are running. The following have/will shortly be introduced to counteract this sort of scheme:

    GAAR: General Anti Abuse Rule - The GAAR Study Group Report was based on the premise that the levying of tax is the principal mechanism by which the state pays for the services and facilities that it provides for its citizens, and that all taxpayers should pay their fair contribution. This same premise underlies the GAAR. It therefore rejects the approach taken by the Courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means, however contrived those means might be and however far the tax consequences might diverge from the real economic position. HMRC will use GAAR to combat schemes which they feel have no purpose other than to avoid tax: the tax payer will be required to revise and resubmit self assessment forms to correct the tax position and will face penalties if they fail to do so.

    Agency Legislation (ITEPA) - if a worker is resident, tax resident and working in the UK then PAYE must be applied to their earnings even if their intermediary is based offshore. If the intermediary does not properly account for taxes owed then the obligation will pass to the recruitment agency that engages with the end client. As part of the same legislation - if a worker engages with an agency then they will be liable for PAYE taxes (which can be deducted by the agency or an umbrella company) if it can be proven that they are under the supervision, direction and control of the client. Agencies will be required to report to HMRC on those workers that they believe will not meet this criteria. This legislation doesn't apply to PSC working outside IR35 as dividends are not considered income for the purposes of the legislation. One of the purposes of this legislation is to stop what is referred to as 'false self-employment' whereby a worker is engaged by an intermediary as 'self-employed' thereby removing the need for the intermediary to pay employer's national insurance.

    Accelerated Payments: DOTAS : workers who have used a tax avoidance scheme registered under DOTAS will be required to pay disputed tax up front i.e. before the validity of the scheme has necessarily been tested in court. The disputed tax will be payable within 90 days.

    Follower notices: These will be issued if HMRC feel that the mechanism to avoid tax has been used by another provider and defeated in court.

    If you contravene any of the above you will be obliged to pay back the tax HMRC deem that you owe, with interest and possibly penalties. HMRC have already set a precedent for retrospective tax legislation - this means that you will not owe tax from the point at which the scheme you use is discredited, you will owe from when you first began using it. There have been over 1 MILLION views of this thread http://forums.contractoruk.com/accou...al-beyond.html which details the misery of contractors caught out by tax avoidance schemes and retrospective legislation. If this doesn't convince you, this entire section HMRC Scheme Enquiries is dedicated to those who have received notices from HMRC following their use of tax avoidance schemes - all of which were promised to be compliant and risk free.

    If it seems to good to be true then it very probably is.
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    #2
    On a side note but something I'd often wondered - who are the biggest umbrella co's about in terms of clients? We tend to hear from a few regularly but that tends to be because they have clients on good day rates...

    Comment


      #3
      Originally posted by LisaContractorUmbrella View Post
      Despite huge rafts of Government legislation dealing with tax avoidance we still seem to have lots of people posting on here who have been tempted by the promise of high take home pay with little or no risk and the backing of QC's. The scheme providers are often very convincing and are marketed to appeal to new contractors who have little or no understanding of the UK tax system and the risks that they are running.
      Anyone who promotes a scheme going forward is a borderline con artist because it's virtually guaranteed to fail.

      Any QC that backs a scheme going forward has zero integrity.

      Harsh but fair I think you will agree.

      Comment


        #4
        Originally posted by DonkeyRhubarb View Post
        Anyone who promotes a scheme going forward is a borderline con artist because it's virtually guaranteed to fail.

        Any QC that backs a scheme going forward has zero integrity.

        Harsh but fair I think you will agree.
        +1, these crooks should be treated the same way as loan sharks IMO, the fact that they are still plying their wares is a disgrace.

        Comment


          #5
          Originally posted by kal View Post
          +1, these crooks should be treated the same way as loan sharks IMO, the fact that they are still plying their wares is a disgrace.
          Yet there are still plenty of mugs willing to sign up - without them, the schemes wouldn't exist.

          We're not talking about 90 year olds with dementia being conned to buy stuff they don't need at 10x market price - these are supposedly intelligent professionals. If you can't read the writing on the wall after all this, you must have several loose screws.

          Comment


            #6
            Originally posted by Mark McBurney@CMME View Post
            On a side note but something I'd often wondered - who are the biggest umbrella co's about in terms of clients? We tend to hear from a few regularly but that tends to be because they have clients on good day rates...
            The general belief in the market is that Giant and Parasol are the two biggest in the UK.
            https://uk.linkedin.com/in/andyhallett

            Comment


              #7
              Originally posted by centurian View Post
              Yet there are still plenty of mugs willing to sign up - without them, the schemes wouldn't exist.

              We're not talking about 90 year olds with dementia being conned to buy stuff they don't need at 10x market price - these are supposedly intelligent professionals. If you can't read the writing on the wall after all this, you must have several loose screws.
              The writing should have been on the wall with BN66 in 2008.

              But tens of thousands have signed up for EBTs and loans since then.

              Comment


                #8
                Originally posted by DonkeyRhubarb View Post
                Anyone who promotes a scheme going forward is a borderline con artist because it's virtually guaranteed to fail.

                Any QC that backs a scheme going forward has zero integrity.

                Harsh but fair I think you will agree.
                Would agree totally DR
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                Comment


                  #9
                  Originally posted by LisaContractorUmbrella View Post
                  Would agree totally DR
                  Is there a complaint to be made to the Law Society (or whatever) about these QC opinions?

                  Comment


                    #10
                    Originally posted by DonkeyRhubarb View Post
                    Anyone who promotes a scheme going forward is a borderline con artist because it's virtually guaranteed to fail.

                    Any QC that backs a scheme going forward has zero integrity.

                    Harsh but fair I think you will agree.
                    They may say that a QC backs a scheme - that doesn't mean he actually has...

                    I would mention to the snake oil salesman for the Chambers of said QC - you will confirm yourself that he/she does indeed back their scheme (never seen a woman QC back them but that's a bye-the-bye).

                    Tell us his reply.
                    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
                    - Voltaire/Benjamin Franklin/Anne Frank...

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