Sanzar Partnership? New IOM company

[tim123]

If I were chancellor, you would not be able to reduce your tax bill by paying dividends instead of taking salary, as the tax system would be structured so that you would pay the same amount of tax either way.

But then you would have a large group of people saying that there was no reward for entrepreneurial risk and the UK economy would suffer for it.

And they would be right.

The problem is that there are far too many people structuring low risk investments in a way that qualifies for a tax break not intended for that type of investment (and no, I'm not taking about freelancers here).

How do you catch the baby when you throw out the dirty water.

tim

[TheFaQQer]

But then you would have a large group of people saying that there was no reward for entrepreneurial risk and the UK economy would suffer for it.

And they would be right.

Seems to work OK for the French, where they tax it the same regardless of where the income comes from.

The problem about such a fundamental shift in taxation logic is that no government wants to upset their big money, big business friends to bring in a fairer system. They'd much rather tell us that it's fairer to mess it up this way...

[ratewhore]

But then you would have a large group of people saying that there was no reward for entrepreneurial risk and the UK economy would suffer for it.

And they would be right.

The problem is that there are far too many people structuring low risk investments in a way that qualifies for a tax break not intended for that type of investment (and no, I'm not taking about freelancers here).

How do you catch the baby when you throw out the dirty water.

tim

What you need is an entrepreneurs dispensation..

[Cheshire Cat]

The bad news is you are going to find it a lot harder to stay outside IR35 having been subject to these schemes in the past.

So you could end up paying far more than if you'd just done a nice Ltd company in the first place.

Can you explain this dude69? I don't see how this follows?

[helen7]

Montpellier

Is anybody here with Montpellier? I was in the scheme for 6 years and I am keen to know if the revenue will continue to seek taxes for payments prior to yesterday. I have asked Montpellier to comment but they are there usual quiet selves!

Changing the legislation would suggest that they are admitting that there was a loophole, albeit from interpretation.

[tim123]

Is anybody here with Montpellier? I was in the scheme for 6 years and I am keen to know if the revenue will continue to seek taxes for payments prior to yesterday. I have asked Montpellier to comment but they are there usual quiet selves!

Changing the legislation would suggest that they are admitting that there was a loophole, albeit from interpretation.

Only HMIT can answer this question. Anyone else will just be guessing.

tim

[BrilloPad]

Is anybody here with Montpellier? I was in the scheme for 6 years and I am keen to know if the revenue will continue to seek taxes for payments prior to yesterday. I have asked Montpellier to comment but they are there usual quiet selves!

Changing the legislation would suggest that they are admitting that there was a loophole, albeit from interpretation.

My understanding was that **IF** HMRC are admitting a loophole then the scheme is legal and closed.

Personally I would like to give montpelier proper time to digest and comment. I refer you to Friendly Accountants comments earlier - it is complex legislation.

[IR35 Avoider]

Having now seen BN66, it does look like they are retrospecively outlawing what was arguably legal. I believe retrospective tax legislation is incredibly rare. I think a precedent was set in the 1980's, when some aspect of tax law was retrospectively changed to actually say what everyone already thought it said. On that occasion I think the change had little impact, this time a lot of people will be affected and lots of money is at stake.

This is an extreme response to an extreme scheme.

Retrospective legislation encourages contempt for the law. If you can't be certain of staying on the right side of the law, because you can't know if todays actions are going to make you a criminal as a result of legislation dreamt up tomorrow, why even bother trying to obey the law?

[BrilloPad]

Having now seen BN66, it does look like they are retrospecively outlawing what was arguably legal. I believe retrospective tax legislation is incredibly rare. I think a precedent was set in the 1980's, when some aspect of tax law was retrospectively changed to actually say what everyone already thought it said. On that occasion I think the change had little impact, this time a lot of people will be affected and lots of money is at stake.

This is an extreme response to an extreme scheme.

Retrospective legislation encourages contempt for the law. If you can't be certain of staying on the right side of the law, because you can't know if todays actions are going to make you a criminal as a result of legislation dreamt up tomorrow, why even bother trying to obey the law?

I thought there was legislation in 2004 which made any retrospective tax legislation legal? And isn't there a more recent one that makes HMRC judge, jury, executioner?

Having seen the way that Government treat f4j (yesterday a friend was arrested and held for 18 hours - they would not even tell him the charge!) and get away with it, one should not be suprised when HMRC flex their muscles. I know a few in montpelier who have spent years with nothing from HMRC - and one with HMRC attempting a good shoeing but montpelier are backing all the way.

I spent a while email bombing a government department - nothing ever happened to me - though I heard it caused considerable disruption.

From what I have seen those who stand up for their rights are less likely to be targeted, but if they are they get alot of grief. IMO For those who can stand up for their rights the way forward is clear.

[IR35 Avoider]

But then you would have a large group of people saying that there was no reward for entrepreneurial risk and the UK economy would suffer for it.

I agree that there would be an affect, but then I suspect high tax rates on employment affect peoples willingness to contribute to the economy in that way. High tax rates are always a problem. If the "same rate" were 20%, then there wouldn't be a problem. Unfortunately, without massive changes in the approach to social spending, the single rate would have to be something like 40%.

Having said that, I suspect the reason employment income is taxed more than business profits is simply because employment is less of an optional activity for most people. In other words, employees are forced to pay more tax because they are an easier target.

Contractors sometimes argue that they should be allowed the favourable tax regime of taking dividends because they take more risks, but I disagree. The reward for the disadvantages of contracting should come entirely from the increased rate.