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

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

    #21
    @22:47
    Originally posted by boulderman View Post

    Of reminder of my rate, *.8 to leave corporation tax and then pay the remainder of what is left quarterly to me (however I've heard you should leave say 30% in the business bank account so was going to do this?)

    Thanks for any help on any points.

    @23:05
    Originally posted by boulderman View Post
    For 9 years I've had multiple offers for every role

    snip

    The warchest can pay for learning if I need to adapt.
    FFS

    Comment


      #22
      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 Post
      I 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


        #23
        Originally posted by jamesbrown View Post
        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.
        And add to that, the number of cases lost which is in dozens, and they had to pay back like 14k on average...

        Comment


          #24
          Originally posted by jamesbrown View Post
          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.

          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 Jack

          Comment


            #25
            ...

            Originally posted by Pondlife View Post
            @22:47



            @23:05


            FFS
            LOL did Boulderbrain forget to take his sockies off before posting?

            Comment


              #26
              Originally posted by BlasterBates View Post
              If 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.
              But 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.

              Comment


                #27
                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


                  #28
                  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 enough

                  Comment


                    #29
                    Originally posted by sal View Post
                    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 enough
                    Explain the VAT bit.
                    The 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_Park

                    Comment


                      #30
                      Originally posted by jamesbrown View Post
                      But 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.
                      There are thousands of audits but only a handful of IR35 investigations. So the IR35 expert gets Joe, John, Pete and 100 others on his desk from various auditors and has to decide which one he wants to investigate, oh look John has max dividends and min salary and Pete has a salary of 30 grand. IR35 investigator will go for John.

                      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 Jack

                      Comment

                      Working...
                      X