BN66 - Round 2 (Court of Appeal)

[Emigre]

Can anyone help me out with this pls?

I'd love to be able to give you an answer that was definitely right but I can't. What you need to consider are the basic principles.

There are a number of unknowns:

1. What is HMRC basing your income on? If they base it on the self-employed element plus the trust income then that figure is already net of MP fees and so you have already had the deduction. I'm sure you agree that getting it twice would be wrong.

2. How are they treating you for tax? If they treat you as self-employed, and God forbid that think thay can change that too, then you will still have already had the deduction since they will be taxing you on your share of the profits of the partnership (which will be after MPs costs).

The more I look at it the two points above are actually the same so I'm pretty sure you get the deduction. It only comes into play if they start working their way up the contract chain and deem you to be an employee. That would effectively trash any contracts that exist anywhere. Even HMRC might stop short of that!

If you've had a CN you should be able to work out what how they have treated you. The short answer is of course "Unfairly".

HTH

[Morlock]

I'd love to be able to give you an answer that was definitely right but I can't. What you need to consider are the basic principles.

There are a number of unknowns:

1. What is HMRC basing your income on? If they base it on the self-employed element plus the trust income then that figure is already net of MP fees and so you have already had the deduction. I'm sure you agree that getting it twice would be wrong.

2. How are they treating you for tax? If they treat you as self-employed, and God forbid that think thay can change that too, then you will still have already had the deduction since they will be taxing you on your share of the profits of the partnership (which will be after MPs costs).

The more I look at it the two points above are actually the same so I'm pretty sure you get the deduction. It only comes into play if they start working their way up the contract chain and deem you to be an employee. That would effectively trash any contracts that exist anywhere. Even HMRC might stop short of that!

If you've had a CN you should be able to work out what how they have treated you. The short answer is of course "Unfairly".

HTH

I think Emigre's right.

MP's fees were never part of your income in the first place, so
1) you haven't been taxed on them
and therefore
2) you can't claim tax back on them.

However, depending on when you joined the scheme, if it is ultimately proven to be flawed then MP may be liable to refund you a proportion of their fees, as promised in their sales pitch. Presumably this then would count as income....

[screwthis]

I'd love to be able to give you an answer that was definitely right but I can't. What you need to consider are the basic principles.

There are a number of unknowns:

1. What is HMRC basing your income on? If they base it on the self-employed element plus the trust income then that figure is already net of MP fees and so you have already had the deduction. I'm sure you agree that getting it twice would be wrong.

2. How are they treating you for tax? If they treat you as self-employed, and God forbid that think thay can change that too, then you will still have already had the deduction since they will be taxing you on your share of the profits of the partnership (which will be after MPs costs).

The more I look at it the two points above are actually the same so I'm pretty sure you get the deduction. It only comes into play if they start working their way up the contract chain and deem you to be an employee. That would effectively trash any contracts that exist anywhere. Even HMRC might stop short of that!

If you've had a CN you should be able to work out what how they have treated you. The short answer is of course "Unfairly".

HTH

I thought they were treating us as employed and asking for full income tax, employers and employees NI?? If we could go down the self-employed route then we could start taking dividends etc. I think the whole IR35 thing is being enforced though. That's certainly what I remember from my closure notice.

DR, by expensed I meant deducted (and that's what I always meant since 1987)

[screwthis]

I thought they were treating us as employed and asking for full income tax, employers and employees NI?? If we could go down the self-employed route then we could start taking dividends etc. I think the whole IR35 thing is being enforced though. That's certainly what I remember from my closure notice.

DR, by expensed I meant deducted (and that's what I always meant since 1987)

Ok, just thought about it some more..

We would lose the MP fees minus the rate of tax we would have paid.

So for example you earn £100,000, rate of tax is 40%, MP fees are 15% of gross. Net loss in fees if we have to pay everything back is £9K (60% of 15K).
I think I was asking if there was anyway to offset this against the tax. Thinking about it this way the answer would prob. be no.

[Emigre]

I thought they were treating us as employed and asking for full income tax, employers and employees NI?? If we could go down the self-employed route then we could start taking dividends etc. I think the whole IR35 thing is being enforced though. That's certainly what I remember from my closure notice.

DR, by expensed I meant deducted (and that's what I always meant since 1987)

DR, by expensed I meant deducted (and that's what I always meant since 1987)

Its very important to distinguish here between being self-employed and operating through a PSC. We do not have any LtdCos and are without doubt self-employed. As far as I am aware, Hector at this point has not tried to change that fact. IR35 relates to deemed employment for those working through LtdCos. It does not relate to us.

As a result, being self-employed we cannot take dividends, we can only make drawings from our business. There is no share ownership of our self-employment businesses so we cannot, for example, split the income between self and partner in the way you can with dividends.

Bottom line here is that if HMRC finally win we will be taxed, as we already are for the existing self-employed element, under Schedule D Case I of ICTA 1988. This is the MP scheme, others may have slightly different arrangements.

As Morlock says, technically any "refund" from MP would be eligible to tax as well although it may well be possible to shelter that receipt since the old scheme has not worked or been operated since 12 March 2008.

There is a long way to go before we need to get too involved in this type of thinking. The worst case basis will be your CNs if you've been unfortunate enough to receive them.

[screwthis]

Thanks Emigre that helps a lot.

My brain glazes over when it comes to tax

[Morlock]

I thought they were treating us as employed and asking for full income tax, employers and employees NI?? If we could go down the self-employed route then we could start taking dividends etc. I think the whole IR35 thing is being enforced though. That's certainly what I remember from my closure notice.

DR, by expensed I meant deducted (and that's what I always meant since 1987)

Your closure notice should show that they are asking for self-employed NI contributions rather than "employer's and employee's", i.e you are liable for Class 2 contribs at a fixed rate, plus Class 4 contribs on your "profits" from self employment.
Plus income tax of course.

[DonkeyRhubarb]

Cleggy's website

We are well out in front at the moment. For a while it looked like some of the others were catching us but it turned out that they also hit on the idea of adding duplicate comments, which have now been removed by the mods.

This also prompted them to update the software last night to prevent duplicate comments.

The way things are going, I can see this turning into a 3-way race between us, the "smokers" and the "pot heads".

I can just picture the headlines in a few months time...

[screwthis]

Read the comments on this thread:

There is a major flaw on how this site is being operated. — HMG - Your Freedom

We're not alone in being targeted nor alone in voicing how pants the site is

[Alan Jones]

Wrong guy

Well done to everyone who has contributed to the thread. As DR has already said, please vote if you havent.

And if you havent commented, please do. It only takes a few minutes.

Also, a big thank you to Alan Jones for inadvertantly helping to make our topic the most commented one

I have not even been to the "cleggy site".

If i have something to say i will not hide behind some "pseudo".

I follow BN66 thread with interest but have nothing more to say on the subject other than to say stop "trashing" me with every negative comment.