Have I been Conned?

[MarillionFan]

Is that a shake of the head at me or the advice I was given?

Obviously I know nothing about tax which is why I went to an advisor so how I am supposed to know corporation tax is also payable when the advisor told me all I would have to pay is 10% on the money in my account.

The shake of the head is at you. You're clever enough to earn 100k in a year. You must have once been permie and so would know how much tax you paid previously. You set up a LTD company, got an accountant (which is the correct thing to do) so I find the this whole thing implausible where you appear stupid enough to know nothing about Corp tax or that you even thought in your wildest dreams that paying 10% total against what you'd earnt for the year and that you then agreed to the advice to close/phoenix etc.

[spud5706]

The shake of the head is at you. You're clever enough to earn 100k in a year. You must have once been permie and so would know how much tax you paid previously. You set up a LTD company, got an accountant (which is the correct thing to do) so I find the this whole thing implausible where you appear stupid enough to know nothing about Corp tax or that you even thought in your wildest dreams that paying 10% total against what you'd earnt for the year and that you then agreed to the advice to close/phoenix etc.

This is my first year as a ltd company, previously I ran it as an LLP which as far as I know is taxed differently.

Yes I'm clever enough to earn £100k in a year purely because I spend my time earning money and leave the 'Tax Savings' to the so called experts (that is what they are there for).

The reason I believed the guy was

1. He was referred to me by my accountant (soon to be ex accountant)

and

2. He told me that this was a one time deal which is why you are allowed to pay 10% on everything and is the reason most companies cannot do it because they need to close and cannot continue trading.

Yes in hindsight I was far too trusting and should have looked into it more myself but like I said I'm busy working and thought this guy was giving me good advice, I had no reason to distrust him.

What I would really like to know is can someone tell me how much tax I would pay ordinarily on the £100k?

Is this correct?

Corporation tax @ 20% = £20,000
Pay myself £7000 tax free
Pay myself a dividend of £73,000 @ 22.5% = £16,425

Is that a correct formula so I would be paying £36,425 on the £100,000?

Because if that is correct then this guy 'Tax Saving' would not have saved me a penny with his fees because it would work out like this.

Corporation tax @ 20% = £20,000
Takes £80,000 out at 10% = £8,000
Fees for closing company = £6000
Fees for setting up new llp with ltd company as a partner = £6000

Total = £40,000

[v8gaz]

erm, wouldn't you pay the corpy tax AFTER you had paid your salary? I'm beginning to see how he could have fooled you...

[Disappointed]

Your calculation is a bit off I think, not only to do with you paying Corp Tax on the salary but also about the tax on the dividend.

My calculation would be:

100,000
-7,000 (salary)
-18,600 (corp tax 93,000 * 20%)

74,400 (profits)

74,400 * 10 / 9 = 82,666 (gross dividend)

-35,000 (lower tax bracket)

47,666 (taxable dividend)

- 10,724 (47,666 * 22.5%)

So if my calculation is correct, you'd pay 18,600 corp tax and 10,724 tax on the dividend = 29,324 total.

[spud5706]

Your calculation is a bit off I think, not only to do with you paying Corp Tax on the salary but also about the tax on the dividend.

My calculation would be:

100,000
-7,000 (salary)
-18,600 (corp tax 93,000 * 20%)

74,400 (profits)

74,400 * 10 / 9 = 82,666 (gross dividend)

-35,000 (lower tax bracket)

47,666 (taxable dividend)

- 10,724 (47,666 * 22.5%)

So if my calculation is correct, you'd pay 18,600 corp tax and 10,724 tax on the dividend = 29,324 total.

Ok thanks so its even less than I worked out which makes the advice even worse.

erm, wouldn't you pay the corpy tax AFTER you had paid your salary? I'm beginning to see how he could have fooled you...

Yeh, like I said I am not an accountant and don't pretend to know about this area.

I thought that is what I paid an accountant for but to be honest whats the point if you have to double check everything yourself and even know how much tax you are supposed to pay... Seems pointless?

[Clippy]

spud, when the adviser advised you on what his proposals were, did you do any further research yourself to see if his advice stacked up or did you instruct him to proceed there and then?

[stek]

spud, when the adviser advised you on what his proposals were, did you do any further research yourself to see if his advice stacked up or did you instruct him to proceed there and then?

And did you really think UK plc would let you move the money for only a 10% slice? If that was the case I'm sure plenty of 'solutions' would exist for doing it regularly...

[spud5706]

spud, when the adviser advised you on what his proposals were, did you do any further research yourself to see if his advice stacked up or did you instruct him to proceed there and then?

I just advised him to go ahead which was stupid but it was all very clear when he explained it to me (everything out of my account at 10%) which was a blatent lie.

And did you really think UK plc would let you move the money for only a 10% slice? If that was the case I'm sure plenty of 'solutions' would exist for doing it regularly...

Yes I did because thats what the 'Expert' was telling me.

But I now know I was definately conned because it looks like I would have to pay virtually exactly the same amount with his method and the dividend route but with the former I also have to pay his £12k fees and also then pay extra accountants fees for the future to do the taxes on the llp with a ltd partne.

So obviously he had no intention of saving me any money, lied to me about how much % I would pay and thought he would get away with it because I wouldn't find out until 2013 when they were due.

Im going to show the guy thee figures tommorrow and ask him to justify his advice, when he cant ill ask him for a refund and if he refuses then ill take him to court.

[xoggoth]

Might be worth checking if you can use this:

https://www.moneyclaim.gov.uk/web/mcol/welcome

[DeludedAussie]

I recently got referred to a tax advisor to see if I could save any tax with my business.

I have £100,000 in my business acccount and when I met with the tax advisor he told me he could get ALL my money out and I would only have to pay 10% tax on it so I agreed and paid his £6,000 fee.

Well it turns out that he is closing the company and making an application to customs under ESC C16.

Now I knew we would have to close the company to do this but what I didnt know and was never told at our meeting was that I was going to have to pay 10% tax PLUS 20% corporation tax, I feel this has been GROSSLY missold to me.

He also said that after closing the company I would have to trade under an LLP in the future with a ltd compnay as a partner and to set this up would be another £6000 so all in all I would have to pay £12,000 for this 'Tax Advice'.

Now I have spoken with the guy and asked for my money back which he refused, what is my next course of action? Do I need to take him to court and is there any professional body I can report him to?

Also as far as I can work out I would have to pay £30,000 tax on the £100,000 plus his fees of £12,000 taking it to £42,000, does anyone know what the tax would have been to take this £100,000 from the company in salary and dividends because as far as I can see this guy has conned me by selling it to me as 'get the money out at 10%' rather than telling me the truth that I have to pay 10% + corporation tax and would his plan actually have saved me any money?

Any help is appreciated with this.

Thanks

Can you name and shame?