Anyone thinking of using an avoidance scheme, DONT!

[smalldog]

For anyone thinking of doing it, my, and Im sure others who have been through 6 years of hell would advise you DONT! It isnt worth the risk, HMRC and the govt may not right now have it defeated, but retro rules are now the norm and not in "wholly exceptional cases" as the law makers would have you believe.

Lets be honest the govt have won, they have essentially made people in old schemes potentially bankrupt, while at the same time making it so terrifying for all others not to entertain the idea with APN'S and follower notices.

[Waldorf]

There will always be some suckers who will fall for the crap that these promoters come out with.

If someone cannot see the direction of travel on tax avoidance then they are blind to the obvious, either that or they are greedy or stupid, or probably both.

[BolshieBastard]

For anyone thinking of doing it, my, and Im sure others who have been through 6 years of hell would advise you DONT! It isnt worth the risk, HMRC and the govt may not right now have it defeated, but retro rules are now the norm and not in "wholly exceptional cases" as the law makers would have you believe.

Lets be honest the govt have won, they have essentially made people in old schemes potentially bankrupt, while at the same time making it so terrifying for all others not to entertain the idea with APN'S and follower notices.

IR35. I've just been reading a thread or two where people have said 'Im outside IR35 because my contract reviewer says so' or 'I make sure my working practices mean Im outside IR35' etc, etc.

Point is, any contractor saying this and operating 'outside' IR35 are just sitting on a ticking timebomb despite what they may like to believe.

[DonkeyRhubarb]

I'm not recommending this but...

There is only one scenario left where it is still safe to use a scheme.

Namely, if you are intending to leave the country in a few years and never return. Obviously you have to pick your new country carefully since HMRC's tentacles do reach to quite a few places in the world.

If you use a scheme, and stay in the UK, be prepared for years of uncertainty and probably an enormous tax+interest+penalties bill at the end of it.

[Zero Liability]

IR35. I've just been reading a thread or two where people have said 'Im outside IR35 because my contract reviewer says so' or 'I make sure my working practices mean Im outside IR35' etc, etc.

Point is, any contractor saying this and operating 'outside' IR35 are just sitting on a ticking timebomb despite what they may like to believe.

Possibly, but HMRC hasn't got a very good track record at winning these cases against anyone with a half-decent defence, and the recent HOL review revealed that they cannot even justify their figures for its efficacy and slammed them for it, with various articles on this website and CW pointing out the deficiencies in them. I think if the Tories do win and go forward with a merger of PAYE and NI, it may be rendered superfluous, anyway. IR35 is pretty murky territory. A lot of this is perception based, and as the HoL review demonstrated, contracting outside IR35 was not viewed solely as a means to reduce one's tax liability, although that is a benefit of it; I think it is better understood that it offers a significant advantage to the UK economy by enhancing its flexibility with respect to access to a medium-to-high skill/specialist workforce. Of course, they could just try and change the law in their favour, anyway, but I suspect they will face a lot more resistance in doing so. So it's not a foregone conclusion.

[centurian]

I think if the Tories do win and go forward with a merger of PAYE and NI, it may be rendered superfluous, anyway.

A true merger - absolutely dead-zero chance of that happening - even though that's exactly what should occur.

A clean sheet approach would be to merge tax + NI and make it payable on dividends as well. The headline basic rate could be lower as there would be less avoidance opportunities - probably around 28-30% which will be less than the current 20%+12% rate.

Those who would get hit hardest would be pensioners and those with dividend income - and for this reason, it will never happen.

The closest they have promised is to merge the administration of Income Tax and NI, which will make no difference to IR35 as it still wouldn't apply to dividend income.

[tractor]

A true merger - absolutely dead-zero chance of that happening - even though that's exactly what should occur.

A clean sheet approach would be to merge tax + NI and make it payable on dividends as well. The headline basic rate could be lower as there would be less avoidance opportunities - probably around 28-30% which will be less than the current 20%+12% rate.

Those who would get hit hardest would be pensioners and those with dividend income politicians and their friends who give them seats on the board after their political career is over - and for this reason, it will never happen.

The closest they have promised is to merge the administration of Income Tax and NI, which will make no difference to IR35 as it still wouldn't apply to dividend income.

FTFY

[Zero Liability]

A true merger - absolutely dead-zero chance of that happening - even though that's exactly what should occur.

A clean sheet approach would be to merge tax + NI and make it payable on dividends as well. The headline basic rate could be lower as there would be less avoidance opportunities - probably around 28-30% which will be less than the current 20%+12% rate.

Those who would get hit hardest would be pensioners and those with dividend income - and for this reason, it will never happen.

The closest they have promised is to merge the administration of Income Tax and NI, which will make no difference to IR35 as it still wouldn't apply to dividend income.

Are you sure of this? My understanding was that they went further and were contemplating a merger of the two forms of tax. If all they're contemplating is merging their admin, that sucks and isn't nearly good enough. I was thinking more 20 - 25%, but you're right, they're a greedy lot and wouldn't settle for less than 28 - 30%.

[malvolio]

Are you sure of this? My understanding was that they went further and were contemplating a merger of the two forms of tax. If all they're contemplating is merging their admin, that sucks and isn't nearly good enough. I was thinking more 20 - 25%, but you're right, they're a greedy lot and wouldn't settle for less than 28 - 30%.

Existing marginal tax is around 40% in total (typically 20% + 6% +13.8%) once you're past the TFA. They aren't going to reduce that.

[tractor]

...

All this conjecture around merging tax and NI ignores the employer's element. There would have to also be an employment tax of around 12% too. How they are going to spin that I have no idea.