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Newbie to Ltd contracting - if you have salary at under £12k you are more likely to..
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Newbie to Ltd contracting - if you have salary at under £12k you are more lik...
Hey, I thought that was exclusive!
Originally posted by speling bee View PostI can introduce you the the Oude Joris MAX120 scheme if you like."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...Comment
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Originally posted by jamesbrown View PostTo 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.Comment
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Originally posted by jamesbrown View PostTo 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.
I think a lot of IR35 investigations are triggered by a PAYE audit, but how do they select PAYE targets? probably a computer, and what does the computer use to identify "targets"?
I suspect one man personal services company, minimum salary and maxed out on dividends, features quite prominently.Last edited by BlasterBates; 3 July 2014, 18:32.I'm alright JackComment
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Originally posted by Pondlife View Post@22:47
@23:05
FFSComment
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Originally posted by BlasterBates View PostIf late filing was a better indicator of being outside IR35 I think they would use it, and the ex-inspector would have mentioned it.
HMRC doesn't have access to critical info such as working practices, they really just have simple information such as it is a Personal Services Company, there is one Director and he's on a minumun salary, so they have to make their targeting decision based on that. To get anymore information would require an audit from an IR35 specialist and they're thin on the ground so I doubt they turn up to all the late filing audits. Lets face it even if the auditor were to the ask to look at a contract since almost all of them have been written to be outside IR35, they're not much use.Comment
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Again, to provide some context, on HMRC's own figures (which could be understating the issue), there are 200,000 PSCs, of which some 50% of directors draw more than 50% of their income in dividends, if I recall correctly. If tens of thousands of directors pay themselves minimum salary, which I (reasonably) assume is not uncommon amongst contractors, they don't learn anything useful by filtering based on this result, which doesn't really tell them anything, anyway. It is reasonable to assume that they do profile based on dividends:salary ratios as a) they've stated as much and b) this helps them identify targets that will yield higher loot as all else being equal, this ratio will vary with the day rate, but even so, this doesn't narrow things down beyond bringing some minimal cost-benefit considerations to the fore. I think like James is saying, they may go for cases where there's already some mishaps going on, beyond their targeted campaigns and random sampling.
Their "win" ratio is abysmal, however, and I wouldn't be surprised if their "wins" mostly include individuals with no awareness of IR35, no protection, who call their clients "employers", their dividends "salary", use terms like "clocking in" etc. Maybe more clients are just refusing to speak to them beyond referring them back to the contract.Comment
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If ifs and buts were candy and nuts....
No one (even HMRC) knows what method HMRC uses to pick targets for IR35. And even if someone knew what they are using now, this can change in the future. So in IMO if you are going to pay more NI, just to potentially shield yourself from a potential IR35 investigation, that you might potentially lose, you might as well just declare yourself inside IR35.
Personally i think 20% CT + 16.5% VAT is enoughComment
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Originally posted by sal View PostIf ifs and buts were candy and nuts....
No one (even HMRC) knows what method HMRC uses to pick targets for IR35. And even if someone knew what they are using now, this can change in the future. So in IMO if you are going to pay more NI, just to potentially shield yourself from a potential IR35 investigation, that you might potentially lose, you might as well just declare yourself inside IR35.
Personally i think 20% CT + 16.5% VAT is enoughThe material prosperity of a nation is not an abiding possession; the deeds of its people are.
George Frederic Watts
http://en.wikipedia.org/wiki/Postman's_ParkComment
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Originally posted by jamesbrown View PostBut there is no targeting unless the targeting variables (salary/dividend mix) provide a conditional sub-sample that is usefully smaller than the overall sample of PSCs. In this context, usefully smaller is defined as a value similar to the number of enquiries opened (otherwise, by definition, you have other, unspecified, targeting variables that are much more important). I'm saying it doesn't do this, because a low salary/high dividend mix is standard operating procedure for PSCs (seething slightly at using that acronym, but...). In contrast, what we do know is that IR35 enquiries may begin with random sampling or with aspect enquiries, which themselves result from something being flagged as dubious (incorrect filing, late filing etc.). So I know which one I'd focus on. Not that I spend any time worrying about this (seriously), because it's all idle speculation and I prefer to focus on what matters, i.e. operating a business and conducting due diligence w/r to legislation.
A) it's a good indicator
B) he'll get a lot more from John than Pete
If we were to take this to extremes i.e. you pay yourself 1% dividends, I think it is obvious you'll never get investigated. i.e. you have 0% chance of being caught this risk will increase gradually until you've maxed out your dividends.
So it is a risk factor that you can reduce by increasing your salary.
...and an HRMC ex-inspector has said this.
I think the idea of the 12 grand is although it's only a small difference which would be irrelevant once the investigation is underway, when the IR35 investigator is running his selection routine on 100 candidates you won't be top of the list.Last edited by BlasterBates; 4 July 2014, 16:44.I'm alright JackComment
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