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Newbie to Ltd contracting - if you have salary at under £12k you are more likely to..

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  • TheCyclingProgrammer
    replied
    Originally posted by speling bee View Post
    Or take loans in a fast depreciating currency from a trust in the Dutch Antilles.
    That sounds like a winner...

    Leave a comment:


  • speling bee
    replied
    Originally posted by TheCyclingProgrammer View Post
    There is one surefire way that you can avoid IR35 issues by manipulating your salary...put the whole lot through your payroll. No need to worry about IR35 then.
    Or take loans in a fast depreciating currency from a trust in the Dutch Antilles.

    Leave a comment:


  • TheCyclingProgrammer
    replied
    There is one surefire way that you can avoid IR35 issues by manipulating your salary...put the whole lot through your payroll. No need to worry about IR35 then.

    Leave a comment:


  • Jessica@WhiteFieldTax
    replied
    Originally posted by northernladuk View Post
    To be fair SJD also advised me to pay a little tax. They admitted there isn't strong evidence for it but if anything changes i.e. HMRC start looking at people under the threshold you're covered so am happy to go with it. I understand there risk levels are pretty damn low but still, sounds like good advice to me.

    EDIT : From an HMRC investigation I mean. I dunno why IR35 is factoring in the this thread to be fair.
    Very similar to the advice we give - £12k, not for scientific reasons as regards emotional ones, "it feels right".

    IMV the important thing is people understand the difference between salary and dividend, and are free to make their own choices as company directors.

    I do despair when I hear - occasionally - company directors referring to dividends as their "wages" and talking about their client as "employer". It happens....

    Leave a comment:


  • TheFaQQer
    replied
    Originally posted by BlasterBates View Post
    The OP is right.

    http://http://www.contractoruk.com/ir35/what_triggers_ir35_investigation.html



    There are other things as well but this a big red flag.

    If you were to pay your self more than 60% in salary I reckon they'd leave you alone. In fact I very much doubt they would have introduced IR35 in the first place if contractors had generally done something like that.
    Bear in mind that article is five years old, so how HMRC currently assess things has probably moved on from there. I'd like to see the evidence that shows that paying £12k or £15k or even £20k when you invoice £100k a year is going to make you "safe", because I just don't believe it's out there.

    Leave a comment:


  • jamesbrown
    replied
    Originally posted by BlasterBates View Post
    The OP is right.

    http://http://www.contractoruk.com/ir35/what_triggers_ir35_investigation.html



    There are other things as well but this a big red flag.

    If you were to pay your self more than 60% in salary I reckon they'd leave you alone. In fact I very much doubt they would have introduced IR35 in the first place if contractors had generally done something like that.
    To put this into perspective, compare the number of investigations (hundreds) to the number of company directors that operate in this way (likely tens of thousands). In that context, it is not a useful discriminator. Beyond random selection, the most obvious discriminator is going to be an incorrect, questionable, or late filing.

    Leave a comment:


  • BlasterBates
    replied
    The OP is right.

    http://http://www.contractoruk.com/ir35/what_triggers_ir35_investigation.html

    Such was the warning yesterday from Bob Jones, an ex-Inland Revenue tax inspector, who outlined the typical appearance of a taxpayer the agency's IR35 inspectors might approach.

    "Someone operating through a limited company who has relatively low turnover; is the sole director; has minimal expenses; pays [themselves] the minimum wage but has large dividends."
    There are other things as well but this a big red flag.

    If you were to pay your self more than 60% in salary I reckon they'd leave you alone. In fact I very much doubt they would have introduced IR35 in the first place if contractors had generally done something like that.
    Last edited by BlasterBates; 3 July 2014, 10:59.

    Leave a comment:


  • northernladuk
    replied
    Originally posted by mudskipper View Post
    HMRC reveals PSC dividends to be more than just monitored :: Contractor UK

    This article from February suggest that drawing more than 50% of income as dividends could raise a flag.

    So 10K or 12K or 16K isn't going to cut it if your aim is to stay below the radar.
    It's just trying to second guess which metric they decide to pick on really.

    Leave a comment:


  • mudskipper
    replied
    HMRC reveals PSC dividends to be more than just monitored :: Contractor UK

    This article from February suggest that drawing more than 50% of income as dividends could raise a flag.

    So 10K or 12K or 16K isn't going to cut it if your aim is to stay below the radar.

    Leave a comment:


  • kevpuk
    replied
    Originally posted by northernladuk View Post
    To be fair SJD also advised me to pay a little tax. They admitted there isn't strong evidence for it but if anything changes i.e. HMRC start looking at people under the threshold you're covered so am happy to go with it. I understand there risk levels are pretty damn low but still, sounds like good advice to me.
    Kind of what InTouch recommended to me, too - I am happy with £12k salary; pay a little PAYE, minimal NI payments.....as far as I can see, there is little need to worry about £10k or £12k etc., make your choice based on what matters to you.

    Leave a comment:

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