Avoid Prosperity4 like the plague!

[Simon SJDaccountancy]

Re: Spod has left the building...

Hi Rebecca,

It's neither illegal or a scam. Just a standard composite Company, but I presume you were made aware that you will have to pay higher rate tax on your dividends that fall in the higher rate bracket?

This will take an additional 25% tax out of your net dividends. Brings the 81% return right down.

[Bradley]

Re:Corporation Tax

They deduct of course the 19% corporation tax off the dividend component of my pay.

Why 19%? You only pay 19% in your own company if taxable profits exceed £50,000.

In fact why take a dividend at all if you don't have to?

One other problem that no-one's ever been able to explain away to me is the rate of corporation tax payable.All the composite companies are probably connected. In those circumstances the Revenue just charge corporation tax at the top rate of 30% because 19% rate is only appropriate for sigle small companies not groups of associated companies. I would guess that there be a lot of trouble for all the ex-shareholders at some stage in the future because they've been paying corporation tax at the wrong rate.

[eamy.smith]

Prosperity 4 upcoming legal action

Yes, take legal action, I am. As this is a matter of public record, I see no problem in posting this information:

Claim No. 6CM00964
Chelmsford County Court
Claim amount: £5438.11
Issue date: 9 March 2006

This is the difference between what I received and what they actually received from my agency after stoppages. There is also a breach of contract issue, because, after taking legal advice, P4 are contracted to provide accounting services, this they fail miserably to do.

They are without a doubt the worst company I have ever dealt with.

[Antman]

Best of luck to you Eamy, you've my support

[bobthebuilder]

I'm sad to learn that Properity 4 are not that good. I have been with Maxipay in Tunbridge Wells and they were awful - I now have a tax bill to pay and can't get any answers from them why I have got it.

[lost_paul]

as Ken Livingstone would put it Giant are a bunch of chisseling little crooks...

They have just held onto £1000 of my hard earned without providing me with any evidence of why they should..They even altered my contract on my portal without my agreement on the say so of the agancy I was working for. They changed my hourly rate ! I am commencing legal action against Giant next week. They have been completely underhand in their dealings with me!

[Denny]

They have just held onto £1000 of my hard earned without providing me with any evidence of why they should..They even altered my contract on my portal without my agreement on the say so of the agancy I was working for. They changed my hourly rate ! I am commencing legal action against Giant next week. They have been completely underhand in their dealings with me!

Good luck, Paul

There's reason for a bit of hard headed common sense required here, when dealing with umbrellas.

Technically, we are the umbrella company's client because we contact them and ask them to act on our behalf to manage our fee administration and pay them accordingly.

However, it doesn't really pan out does it. The umbrella has to get their fees from the agency first so, by default, the agency really becomes their client and we are merely the commodity that makes that client - umbrella relationship possible.

My advice therefore is this:

Avoid any umbrella company that seems to be too vocal in working closely with agencies or who seems to have a finger in groups like the PGC that also have agency affiliates. If they are a preferred agency supplier recommended brolly then avoid them like the plague. Given the current litigious 'risk free' climate of agencies these days, the agency wouldn't be recommending them if they didn't think that they had the upper hand in the relationship. Giant representatives have often appeared in articles that also quote from ATSCO too - usually about contractor related matters which neither have the right to do, in my view, considering neither are nominated representatives of contractors.

When I use a brolly I don't have any signed terms and conditions with them - it is purely based on trust. For the record too, I am not PAYE either when I use the one I go to - in fact I'm freelance and intend to stay that way because most of my private clients are invoiced directly also. I don't have a problem with doing this because I would probably be within IR35 anyway and it means that I can avoid paying employers NI and claim legitimate dispensations in much the same way as I would if I were PAYE. Only the agency don't get to hear about that arrangement between myself and the brolly. For a start it's none of their business, and secondly I'm not doing anything illegal. The same brolly say all the right things, sign all the right forms with the agency as they want to hear it (which clearly states that the IR arrangment with me is PAYE as they often insist on) but it's only on my instructions. As far as I'm concerned (and the brolly) the brolly is the limited company that the agency want to deal with as they wish to, but that doesn't mean to say that I have to be caught up in that corporate structure as an employee. They only charge me a £17 admin fee for transferring my cheque - AND gross - and that's it. Then it's over to you Denny for the rest of the IR tax payment stuff which I sort out via self assessment as a sole trader along with all my private client fees.

If in doubt, then just go limited.

[cojak]

Denny has it all nicely sorted. The man has his head screwed on the right way and he knows what he's doing..

For the rest of you out there, if you can't get your head around what Denny's done - get yerself limited, find a reasonable accounting package for your invoices (optional) and go with an accountant. If you think that joining a brolly saves you from the (minimal) hassle of doing it yourselves you're sadly deluded, mon amis...

[ASB]

Denny,

I'm confused. Probably just misunderstood what you wrote. you seem to be saying:-

1) You have no written agreement with the Brolly
2) They pay you the agency bill less a 17 quid fee
3) you treat this as self employed income

As you say there is nothing illegal in this [provided the brolly is not an employment business and I assume it isn't].

The thing that bothers me is that the brolly is taking a huge risk. If the IR ever do any investigation into anybody in the chain then they are pretty soon going to end up having a chat with the brolly. Given the lack of a written agreement between you and the brolly the IR are unlikely to simply accept you are self employed. They then launch a formal status enquiry and state you are brollys actual employee. The result of this is that brolly get a huge bill since anything paid to you is deemed to be net pay (on the plus side you probably get to reclaim any tax and NI you have paid).

How on earth do you see yourself winnning the status enquiry (granted it doesn't matter since the consequence fall on brolly) but I don't see why brolly aren't worried.

[Denny]

Denny,

I'm confused. Probably just misunderstood what you wrote. you seem to be saying:-

1) You have no written agreement with the Brolly
2) They pay you the agency bill less a 17 quid fee
3) you treat this as self employed income

As you say there is nothing illegal in this [provided the brolly is not an employment business and I assume it isn't].

The thing that bothers me is that the brolly is taking a huge risk. If the IR ever do any investigation into anybody in the chain then they are pretty soon going to end up having a chat with the brolly. Given the lack of a written agreement between you and the brolly the IR are unlikely to simply accept you are self employed. They then launch a formal status enquiry and state you are brollys actual employee. The result of this is that brolly get a huge bill since anything paid to you is deemed to be net pay (on the plus side you probably get to reclaim any tax and NI you have paid).

How on earth do you see yourself winnning the status enquiry (granted it doesn't matter since the consequence fall on brolly) but I don't see why brolly aren't worried.

I don't see there being a problem at all. I set up my own sole trading company directly with the IR within three months of starting it, as the rules stipulate. I pay all my own tax via self assessment minus dispensation allowances advised to me by my accountant. If the IR wanted to investigate me they would do so in much the same way as they would any sole trader. There are no details on my tax returns about how I get my work or if I'm operating through an agency - not that it would matter if I did. I am down as a self employed consultant not an interim manager. Some agencies in my field allow freelancers anyway, but not in IT. So why is it very different? By setting up my business in this way I can put all my eggs in one basket when it comes to tax returns - all my privately invoiced clients and the agency work. So what? If I had to separate the two out I would still need to fill in a tax return to get dispensations on all my between contract work and to declare my private client work. This way I save myself the hassle and avoid employers NI to boot even if I do pay more tax than the limiteds who pay themselves meagre salaries and take the rest as dividends.

There would only be a problem if the brolly didn't give over their own limited company name and number and so on. By doing that they are doing everything the agency wants of them.

As private eye pointed out. If the end client decided not to play ball and didn't pay the agency the fee and the agency didn't pay my brolly the fee I would go straight to the agency for the money using a Garnisee order. Then, I suppose they would soon find out that I was never employed by the brolly in the first place. However, even with normal PAYE brollie structures most of their T&Cs contain clauses dissassociating themselves from paying their 'employee' if the agency doesn't pay them. In that case, the contractor would still have to issue a Garnishee order against the agency.

This set up suits me well because I tend to be within IR35 anyway and I always opt in to the agency regulations. If I felt that I was autonomous enough in my actual working conditions to come and go as I pleased, used my own equipment and so on and was clearly outside of IR35 I would set up my own limited company instead.