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Ecron Management Services

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    Ecron Management Services

    I've been contacted by a company called Ecron Management Services promising to pay me up to 86% of my contract value. (warning bells ring in my head)

    Is what they are promising legit? Or a dodgy scheme that will put my in HMRC's cross hairs?

    I am operating a Ltd company, contracting my services to a client through a standard recruitment agency. EM Services have this to say:

    "You will become a consultant of ECM LTD who will direct your services through your own LTD Co to the agency – as such the majority of your contract value will filter down to Ercon Management as an expense for your Limited Company.

    This is very simple to operate; you will be engaged by your LTD Co as a director to perform basic admin duties (like ensuring it invoices correctly) and carrying out the statutory functions of a director for a small salary/some dividends, while you will also be engaged by ECM LTD separately to perform your work, for which you will receive small consultancy fee and an option payment.

    Option Payment

    Option payment can be summarised as a person paying capital to another person in exchange for income based upon that original capital sum from the other party in the future.

    ECM LTD will pay a capital sum to the freelancer under the option payment agreement. In return, the Contractor promises to pay an annual income to back ECM LTD at some point in the future.

    This income does not become payable until Ecron Management decides it wants to trigger repayment – so payment of the income is deferred."


    Has anyone got experience of this kind of billing set up?

    Thanks
    Sam

    #2
    Originally posted by shedges76 View Post
    I've been contacted by a company called Ecron Management Services promising to pay me up to 86% of my contract value. (warning bells ring in my head)

    Is what they are promising legit? Or a dodgy scheme that will put my in HMRC's cross hairs?

    I am operating a Ltd company, contracting my services to a client through a standard recruitment agency. EM Services have this to say:

    "You will become a consultant of ECM LTD who will direct your services through your own LTD Co to the agency – as such the majority of your contract value will filter down to Ercon Management as an expense for your Limited Company.

    This is very simple to operate; you will be engaged by your LTD Co as a director to perform basic admin duties (like ensuring it invoices correctly) and carrying out the statutory functions of a director for a small salary/some dividends, while you will also be engaged by ECM LTD separately to perform your work, for which you will receive small consultancy fee and an option payment.

    Option Payment

    Option payment can be summarised as a person paying capital to another person in exchange for income based upon that original capital sum from the other party in the future.

    ECM LTD will pay a capital sum to the freelancer under the option payment agreement. In return, the Contractor promises to pay an annual income to back ECM LTD at some point in the future.

    This income does not become payable until Ecron Management decides it wants to trigger repayment – so payment of the income is deferred."


    Has anyone got experience of this kind of billing set up?

    Thanks
    Sam
    No. Why would we? Nor should you.

    There are plenty of horror stories about people who think using some contrived scheme to cheat the taxman is - or was - a good idea. Why add to their numbers?
    Blog? What blog...?

    Comment


      #3
      Originally posted by shedges76 View Post
      I've been contacted by a company called Ecron Management Services promising to pay me up to 86% of my contract value. (warning bells ring in my head)

      Is what they are promising legit? Or a dodgy scheme that will put my in HMRC's cross hairs?

      I am operating a Ltd company, contracting my services to a client through a standard recruitment agency. EM Services have this to say:

      "You will become a consultant of ECM LTD who will direct your services through your own LTD Co to the agency – as such the majority of your contract value will filter down to Ercon Management as an expense for your Limited Company.

      This is very simple to operate; you will be engaged by your LTD Co as a director to perform basic admin duties (like ensuring it invoices correctly) and carrying out the statutory functions of a director for a small salary/some dividends, while you will also be engaged by ECM LTD separately to perform your work, for which you will receive small consultancy fee and an option payment.

      Option Payment

      Option payment can be summarised as a person paying capital to another person in exchange for income based upon that original capital sum from the other party in the future.

      ECM LTD will pay a capital sum to the freelancer under the option payment agreement. In return, the Contractor promises to pay an annual income to back ECM LTD at some point in the future.

      This income does not become payable until Ecron Management decides it wants to trigger repayment – so payment of the income is deferred."


      Has anyone got experience of this kind of billing set up?

      Thanks
      Sam
      Tempted to join a new contractor scheme? Ask the following questions
      "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


        #4
        Originally posted by shedges76 View Post
        Is what they are promising legit?
        No

        Comment


          #5
          Thanks Cojak - very informative

          Comment


            #6
            Originally posted by malvolio View Post
            No. Why would we?
            Welll... if loads of people were using them with no problems, I'd consider it more seriously. Clearly I'll be avoiding this based on initial feedback Thanks malvolio

            Comment


              #7
              HMRC: Tax avoidance schemes and how to spot them
              "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


                #8
                Originally posted by shedges76 View Post
                Welll... if loads of people were using them with no problems, I'd consider it more seriously. Clearly I'll be avoiding this based on initial feedback Thanks malvolio
                Loads of people were using EBT-based schemes without any problems until HMRC caught on...

                Comment


                  #9
                  EBT

                  Comment


                    #10
                    Originally posted by shedges76 View Post
                    Option Payment

                    Option payment can be summarised as a person paying capital to another person in exchange for income based upon that original capital sum from the other party in the future.

                    ECM LTD will pay a capital sum to the freelancer under the option payment agreement. In return, the Contractor promises to pay an annual income to back ECM LTD at some point in the future.

                    This income does not become payable until Ecron Management decides it wants to trigger repayment – so payment of the income is deferred.
                    That is exactly the type of thing that the 100% penalty regime in the General Anti-Abuse Rules was designed to stop. But it's also stopped by the disguised remuneration legislation. I'll let you ask your accountant about that. But if you do, tell her that you are "A", your limited company is "B", Ecron Management is "P" and that the cash they pay you is a relevant step because it is to you (or it is to the limited then to someone linked to you (within the meaning of s554Z1)). Maybe ask them to confirm that you will have to pay employment income tax on the cash you (or your Limited) receive. This tax is collected by your limited company through the PAYE system (with employee's and employer's NIC due). If you don't promptly reimburse them then there is further tax and NIC on the PAYE that you did not reimburse. Don't forget to mention DOTAS and the employment income hallmark to your accountant when you ask about the 100% GAAR penalties. As contrived and abusive are written all over this then you might become famous by HMRC asking the GAAR Advisory Panel to give an opinion. Add together the penalties for RTI failure, interest on late tax and so on, you will find that your effective tax rate could be close to 200%. And your MP won't be sympathetic either.

                    Comment

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