expenses and umbrella Co's

[Robot]

Question

What is the difference between a dispensation and claiming scale rate payments?

If an Umbrella Company has a dispensation fair enough, no need to show anything on the P11d, but surely the scale rate payment thingy is different…..No?

[partimer]

Re: OK then...

If people want to use brollies then that's fine.
What I find amazing is the number who claim bogus expenses and then switch contracts (and brolly) and start claiming yet more bogus expenses at the new brolly.

The idea being that the IR will never bother chasing the ex-employee of the brolly.
I find that dishonest (as well as what other people have already stated above) but what are the chances of them being caught ?

That's why some people use a brolly (not all mind you !).
I've met several brolly users who did that and they basically pay no tax since they got the full allowance every week (tax free) which more than off set the outgoing fees.

[bam70049]

Re: OK then...

RE: I've met several brolly users who did that and they basically pay no tax since they got the full allowance every week (tax free) which more than off set the outgoing fees.

A good reason to use a brolly then?
If they can get away with it then good luck to them!

[mailmannz]

Re: OK then...

The reason thousands of us use umbrellas is to get rid of the administrative burden when using accountants and allows us to concentrate on doing our job.

I use an umbrella because I can fax a timesheet to the agency on the monday and the money is in my bank account the following monday.

And how is that different from what Im doing now under my own company?

Ive finally seen the light and dont see any point in paying other people monthly fee's for me to get my money.

Mailman

[bam70049]

Re: OK then...

I do not need to worry about VAT inspections , IR35 investigations, PAYE compliance reviews, VAT returns, companies house, Corporation Tax,P11D forms,S660A, company accounts, trying to understand company accounts, company bank accounts, setting aside money for tax, accountants fee, PEI and EPL insurance (all included with the brolly), complicated tax return ...............etc.

Re: Ive finally seen the light and dont see any point in paying other people monthly fee's for me to get my money.

Do you not pay for an accountant?
And its not your money its the company's - in the company's bank account- need to access it by dividends, directors loans and then keep some aside for future tax etc. whereas my money is in my bank account straight away to do as I please.

In the recent PBR - Small companies, the self-employed and the tax system: a discussion paper it seems Gordon Brown intends to have you paying NI on dividends anyway.

[mailmannz]

Re: OK then...

So what does it cost to be part of a brolly? I doubt they do it for love.

Mailman

[bam70049]

Re: OK then...

I pay £14.95 each week or if you are paid monthly its £44.95.

[malvolio]

Seems pretty cheap...

...but let's wait and see how long the brolly conept survives the PBR's stated intetnion about "right amount of tax". It may not yet be aimed at brollies (at least, not the sensible ones - some schemes deserve all they get!)

But I'm not going to bet that at some point soon you will be paying exactly the same NICs and PAYE as an employed person on the same gross salary - as well as the brolly's fees, and your training costs of course. It would be hard to defend the brolly approach as being nothing more than a tax avoidance exercise. At least the LtdCo has a starting point for the argument.

As always, it's a personal assessment of percieved business risk. We all make our own decisions - the trick is making the right one!

[bam70049]

Re: Seems pretty cheap...

Its not the brollies he's after - this is from the news section

Gordon Brown has come under fire from advisors and accountants over plans to cut tax incentives for limited liability companies.

The Chancellor is expected to abolish the traditionally less onerous tax regime for micro-businesses because he needs to address a £34.2 billion funding shortfall.

According to the Times, the plan is likely to mean a hike for limited company owners in their NI contributions, so the tax treatment of limited liability owners can be better aligned with employees and the self-employed.

Also its up to the individual to choose what suits him best ltd co , brolly etc.
In my example I am part of that highly skilled flexible workforce ( travel 300 miles stay in hotels etc. ) Gordon Brown supports but sees as a cash cow to pay for the really important wealth creation public service jobs eg. 'School Condom Coordinator' or 'Teenage Pregnancy Advisor'

With all this uncertainty S660A for example I've plumped for a brolly ( sensible one) but others will prefer ltd company.
You pay your money and take your choice

[partimer]

re: Seems pretty cheap...

>A good reason to use a brolly then?

No.
The difference between tax avoidance and tax evasion is the thickness of a prison wall. Claiming bogus expenses is no different then not getting caught whilst you burgle somebody's property. You may get away with it but it's still wrong.

Agree with Malvolio.
The Clown will be after more tax to prop up the 35 billion deficit. I'll be surprised if we all (brolly + Ltd) don't get hammered in some way. Some brollies are just so blatant at selling their services as tax avoidance but it is in fact tax evasion.