How do Prosperity4 get away with it!!!

[YNWA]

The below is taken from there website. Even after the budget, they are still slagging PSC's and promoting there fantasy non-receiptable umbrella!! Somebody stop them


Don't even try to get your head round it all

The Treasury and HMRC are getting really tough on contractors. There's IR35, IR56 and S660A. They're going after offshore employee benefit trusts and tax-motivated incorporation - people starting up limited companies to avoid tax. The 2006 Budget report targeted offshore and composite schemes for investigation, made some tax avoidance schemes illegal, and will let HMRC claim back taxes from members.

So if you're thinking of using an offshore scheme, composite company or personal services limited company, think again.

If it all sounds like a complex, ever-changing, expensive legal nightmare - it is. And as someone working for themselves, you can't afford to try being your own tax expert.

But it's not all bad news. Not only do HMRC allow flexibility by permitting employment management companies like us to exist, but they've given Prosperity4 a genuine and exceptionally good dispensation which means you can claim business expenses, legally and be highly tax-efficient, without needing receipts for a large majority of them.

And the best bit of news is that we can do all your tax for you and keep you entirely legal.

To speak to one of our tax experts call 0800 587 74 74.

[oraclesmith]

I think they should post pictures of their staff on the site.

[The Lone Gunman]

They quite clearly have a dispensation to pay unreceipted claims of up to 95 quid per night B&B plus 16 quid per day for other meals (other rates apply outside London) where not other tax would be liable from the employee.


What is wrong with them saying that?

[Nixon Williams]

I would guess that whilst they do not need receipts you still need to show that you have incurred the cost. If the Revenue enquire into either P4 or your own tax affairs.

Alan

[oraclesmith]

This is old ground, but in my opinion their dispensation is quite normal - given that they are an employer of their brolly contractors. It's common for employers to offer per diem rates to staff which mean that providing the event actually incurred (eg. you actually stayed away for 3 days or whatever) then they pay the fixed amount per night/meal, which may bear no resemblance to what it actually cost you. It's used to simplify the employers admin and it allows employees to trade-off comfort versus cash.

Organisations that set a maximum amount per night instead of a fixed amount almost always end up paying out near to the maximum each time anyway because it's human nature for employees to spend all their 'allowance' on nice hotel rooms or three course meals.

If you've got receipts, then it would be prudent to keep them in case you get a personal tax investigation, not because you need to prove the amount incurred but you may need to prove you did in fact stay overnight or paid for a meal and you were therefore right to claim the per diem fixed amount.

As for P4's scare stories about limited's - that's just wrong.

In my opinion.

[YNWA]

So the new budget proposals havent really had an affect when it comes to P4?

[oraclesmith]

If you're with a brolly, you'll be paying about as much tax as if you were PAYE. The only real difference is that brollies allow you a better expense policy, so in my opinion the only thing the HMRC are likely to go after is expense abuse.

[kirk]

This is old ground, but in my opinion their dispensation is quite normal - given that they are an employer of their brolly contractors. It's common for employers to offer per diem rates to staff which mean that providing the event actually incurred (eg. you actually stayed away for 3 days or whatever) then they pay the fixed amount per night/meal, which may bear no resemblance to what it actually cost you. It's used to simplify the employers admin and it allows employees to trade-off comfort versus cash.

Organisations that set a maximum amount per night instead of a fixed amount almost always end up paying out near to the maximum each time anyway because it's human nature for employees to spend all their 'allowance' on nice hotel rooms or three course meals.

If you've got receipts, then it would be prudent to keep them in case you get a personal tax investigation, not because you need to prove the amount incurred but you may need to prove you did in fact stay overnight or paid for a meal and you were therefore right to claim the per diem fixed amount.

As for P4's scare stories about limited's - that's just wrong.

In my opinion.

Hmm, never quite thought about it like that before but it makes perfect sense really, thanks for that! It puts my previous thoughts about P4 in a completely different light.

[oraclesmith]

Some of these firms like to appeal to the tax dodger in all of us - the thought that we might be putting one over the HMRC and getting a bit more than other contractors if we go with their structure. That's why people keep asking about offshore schemes, EBT's and the like, thinking they are the new Phillip Green.

In reality, the umbrella's are very close in their offerings so unless you really care about a few quid here or there, you are best to go on their reputation amongst experienced contractors. You don't really want to have a badly run company managing your employment.

In my opinion.

[LisaContractorUmbrella]

Oraclesmith is quite correct - a dispensation counts for nothing as it is just an accounting tool for the umbrella company. You can only claim expenses that are allowed by the Inland Revenue and they must be supported by receipts