Self employed but with own Ltd Co

[tristanlj]

Hi

I've been approached by a scheme in IOM where I need to change my status to self employed. However, my agency won't deal with this particular scheme provider. To work around this, the scheme suggest that they deal with my Ltd company and invoice that rather than my agency, therefore circumventing the issue. Can someone tell me if this is a legitimate work around or if I, as director of the Ltd company, then become liable for tax?

Any help would be greatly appreciated.

Many thanks

[northernladuk]

Walk away. Simple as that.

You shouldn't feel comfortable at best with any offshore scheme that avoids you paying tax.. and with good reason.

Check the BN66 threads, do some searches using the term offshore and IOM.
Search the board for the name of the company running the scheme.

This should give you more than enough reasons not to go with this let alone the gut feeling you should be having already.

[eek]

Walk away. Simple as that.

You shouldn't feel comfortable at best with any offshore scheme that avoids you paying tax.. and with good reason.

Check the BN66 threads, do some searches using the term offshore and IOM.
Search the board for the name of the company running the scheme.

This should give you more than enough reasons not to go with this let alone the gut feeling you should be having already.

WNLUKS. Why risk massive tax bills to save some tax while donating a similar amount to the cowboy's selling you this scheme.

Don't forget the risk will be that HMRC decide you are an employee and charge you tax and national insurance on everything.

[craig1]

Hi

I've been approached by a scheme in IOM where I need to change my status to self employed. However, my agency won't deal with this particular scheme provider. To work around this, the scheme suggest that they deal with my Ltd company and invoice that rather than my agency, therefore circumventing the issue. Can someone tell me if this is a legitimate work around or if I, as director of the Ltd company, then become liable for tax?

Any help would be greatly appreciated.

Many thanks

The model they're suggesting you use, I believe, is that they bill you for every penny of income into your ltd co (minus bare minimum expenses, e.g. for annual return fees), you take no salary from the ltd co, pay no dividends and no CT, essentially becoming a money handling company.

You're adding huge extra risks to yourself by using that model as it will inevitably gain attention when income=outgoings with a £0 profit. You'll trigger VAT, PAYE and CT flags at HMRC to the point that they might even share the rubber gloves when they start the audit.

I'd suggest two realistic options for you:

1. Drop them and contract as a standard ltd co model
2. Call them up, laugh at them then do 1. above.

There is a third option: Go for it but take a cautious investment outlook where you put away 200% of all savings over the standard ltd co profit and keep it somewhere safe for the high chance of future audit.

[eek]

There is a third option: Go for it but take a cautious investment outlook where you put away 200% of all savings over the standard ltd co profit.

500% would probably be a better bet based on the stories I've heard regarding BN66.

[tristanlj]

Thanks for your replies. The company is called Helix and there's not much that has been written about them. Either way, I think I'll follow my gut and take the safe route. The country could do with the extra money...!

[northernladuk]

Thanks for your replies. The company is called Helix and there's not much that has been written about them. Either way, I think I'll follow my gut and take the safe route. The country could do with the extra money...!

LOL thats the spirit!!! ..... but don't be giving them too much of it!!

[Wanderer]

I've been approached by a scheme in IOM where I need to change my status to self employed. However, my agency won't deal with this particular scheme provider. To work around this, the scheme suggest that they deal with my Ltd company and invoice that rather than my agency, therefore circumventing the issue. Can someone tell me if this is a legitimate work around or if I, as director of the Ltd company, then become liable for tax?

The risk is that you get investigated and your LTD company becomes liable for the TAX/NI that was due (and not paid) to yourself as a self employed worker. If they can't go after the scheme provider then they will get you as company director. This is the exact reason why your agency will not deal with the scheme provider directly.

I'm sure lots of people use these offshore schemes and think they are great but ask your scheme provider how much UK tax you will pay. They will probably say very little, give a long but ultimately vague answer and won't want to get into any specifics. Now consider how much the scheme provider is making out of the deal and ask why they are so keen to push it. In the end they will get snooty and tell you "hrrrumph, it's not for every one you know" as if you are obviously not good enough for them or it's some sort of exclusive deal.

Many providers offer big referral fees to people who get others to sign up to the scheme so beware that people may have an axe to grind.

HMRC have made it clear they don't like these schemes and it is likely that they will attack the scheme at some time in the future and go back 6 or more years in assessing taxes due. When this happens, there is a danger that the scheme provider disappears into thin air leaving you with a big tax bill.

Schemes that hold your money in some sort of "trust" or hold your money for more than a day before it's paid to you are also risky. If they get wound up, then your money could be gone but the tax bill is still there.

For a while there were a number of schemes that "loaned" you money which you spend as if it were income. What would happen if they called in the loan and made you pay it all back? If they would never ask for the loan to be repaid then is it really a loan?

And don't go thinking that HMRC are "stupid" and don't know what's going on with these schemes. They are well aware of them and even list the schemes on their website. It may take them a couple of years to take action against them but once they become popular enough to be a fat target, rest assured that they will move in and close them down, the operators will disappear and the workers will be left crying over a big tax bill.

[eek]

WWS but good luck ITgeek.

Especially when HMRC decides to collect all the NI and income tax they believe you should have paid over the past x years while Helix disappears to a new office under a different name.

As an aside don't take KPMG's knowledge of the scheme as tacit approval. Consultancies will do anything for money and that fact they have looked at the scheme and say its ok doesn't mean that they use it themselves.

[stek]

Hi Guys,

My name is Tony - Ive been with Helix since 2010 - the solution has worked exceptionally well for me; Glen and the other boys are great, always there to answer my questions or concerns, and as a result myself and Glen are now good friends. The scheme is compleletly water tight, Harley Richards and KPMG work with Helix to ensure this; BN66 is completely irrelevant for the Helix solution so no need to worry about that.

I understand peoples concerns - but i would reccommend the solution to any contractor.

Good luck with whatever you decide.

Does anyone really believe this guy is NOT a Helix shill?