Is or has anyone used No Longer Ltd before?

[ITGuru2]

I have been using them for the last 6 months acting as self employed, I recently secured a new contract and was informed by No Longer that I would have to operate as an employee under a scheme called the "Deemed Payment". I was informed that I would receive 5% of my income as an additional tax free benefit. I tried to look on the HMRC website to see if this was/is accurate as they told me it is the design of HMRC, but could not find any clarification as the site has too many bloody pages to make sense out of things.

I decided to take this to my local HMRC office. Upon examination of this, they have informed me that this is in fact not the way I should be doing it and that this 5% should not be paid to me, effectively telling me I would be liable for this 5%.

Has anyone else been operating in this way?? If so could my explanation be incorrect?? I am slightly nervous now, as they have said they are going to pass over NLL's details to have a further look at. Have I created a scenario that I have just calculated incorrectly....... Also how liable would I be.

I have not been contracting long and am very nervous, please help.......

[Sockpuppet]

They have deemed that you are inside IR35. When you are inside IR35 you have to give yourself "Deemed Payment".

As such you are allowed upto 5% of your salary as expenses. They are basically claimnig this for you giving you some extra.

[tim123]

They have deemed that you are inside IR35. When you are inside IR35 you have to give yourself "Deemed Payment".

As such you are allowed upto 5% of your salary as expenses. They are basically claimnig this for you giving you some extra.

No, you are allowed up to 5% which need not be part of the 'deemed payment'. Allowable expenses are taken off before the 5% (and the deemed payment) is calculated.

The 5% is still is a taxable payment and needs to be accounted for properly. It can be paid out as a dividend (assuming that you operate in a way that pays dividends), or it can be paid out against 'other' expenses that are not allowed by IR35 but which are 'normal' business expenses. These expenses do, of course, have to be genuine.

tim

[Nixon Williams]

I agree with tim123, the 5% allowance is just used to calculate the deemed salary, the 5% can be used for other expenses or paid as a dividend (after corporation tax) but it cannot be paid free of tax.

Alan

[LA1]

The following link to HMRC website explains the deemed payment allowance.
http://www.hmrc.gov.uk/manuals/esmmanual/ESM3145.htm
As you will note the first deduction from the amount received is the 5% then
expenses followed by employers NI.

Tax and NICs are then applied to the remaining figure.