Bedouin Tax Solutions

[LisaContractorUmbrella]

Thanks Lisa, if they get in touch there's nothing I can really do about it now and just be thankful it's only been 5.5 months as opposed to years under the scheme like sum. Will just need to deal with whatever HMRC bring my way

Very sensible and, from now on, use a proper umbrella company or set up a Ltd and sleep at night

[BlasterBates]

My advice would be exit the scheme immediatley, go and see an accountant and get your tax affairs in order. You´ve lost the fees but you don´t want a loan, you want your income in your bank account.

I find it sad that people still recommend irresponsible tax schemes.

[prozak]

I started my first contract in July 2012, instead of using a typical umbrella company I went with Bedouin. As I'm about to start another contract I just wanted to check if the recommendation was that Bedouin was not to be trusted due to their EBT use and I would be better off with a standard umbrella firm?

Thanks

Anyone using an EBT before Dec 9 2010 was being risky.

Anyone using an EBT after 2010 is being a fool.

[prozak]

(I'm a £250 daily rate and my total deductions are around 19%)

Jeesus effing Christ.

All that risk and only 81%

you can achieve 76% by going limited FFS! Nothing fancy. Just expenses and dividends.

Edumicate yourself before I slap you!

Contractor Calculator - Your Expert Guide to Contracting. For UK Contractors, Freelancers, and Consultants


Your Details Rate £250
Rate Type Daily
Hours per week
Days per week 5
Weeks per year 44
Salary £8,000
Legitimate section 98 expenses £3,000
Pension contributions £0
Other income £0
Tax code 810L
Dividend percentage 100%
Personal Income Net Annual Income £42,066
Net Monthly Income £3,505

[thebear14]

Anyone using an EBT before Dec 9 2010 was being risky.

Anyone using an EBT after 2010 is being a fool.

Appreciate that, not much I can do now though is there

[Wanderer]

All that risk and only 81%

you can achieve 76% by going limited FFS! Nothing fancy. Just expenses and dividends.

£250/day should net over 80% with a LTD company outside IR35 according to this calculator which seems even more optimistic - I don't know which one is more accurate.

Also, that could be higher if the contractor was willing to retain some money in the company and avoid becoming a higher rate tax payer.

On the downside, there is IR35 and the admin of running a company to worry about and if you think you are caught by that then Umbrella is probably your best bet...

[prozak]

£250/day should net over 80% with a LTD company outside IR35 according to this calculator which seems even more optimistic - I don't know which one is more accurate.

Also, that could be higher if the contractor was willing to retain some money in the company and avoid becoming a higher rate tax payer.

On the downside, there is IR35 and the admin of running a company to worry about and if you think you are caught by that then Umbrella is probably your best bet...

Possible to get higher if you go FRS i think.

[Wanderer]

Appreciate that, not much I can do now though is there

So folks, putting aside the fact that it was unwise (but probably not illegal) to enter into such an aggressive form of tax avoidance, what are the options.

Shut down the EBT and declare the income to HMRC? Although we are pretty negative about EBT's, is it really worth putting your hands up to HMRC and paying tax when it's not strictly necessary to do so? IF HMRC defeat the scheme at some time in the future then the tax would be payable but that's a big "if".

And what would happen if someone put their hands up to using a scheme like this. Would they have to pay employer's NI? How could they because they are not an employer? Would the employer seek to recover the NI from the contractor?

What's wrong with just stopping using the EBT and report nothing to HMRC (apart from what you are required to do by law) and hoping that nothing will ever come of it?

The scheme was clearly entered into in good faith and if it was defeated by HMRC then back taxes and interest would be due. Why not just figure out how much tax is potentially owed and put that aside in an investment account for 6 years and if HMRC don't come after it during that time then the money is yours to keep.

The sticking point may be that HMRC can prove that this is a loan and the tax becomes due when the loan is written off at some time in the future (possibly when the contractor is a higher rate tax payer too) so it might cost more in the long run.

What do Bedouin say will happen if you tell them you want to get out completely? Could be an interesting question...

[LisaContractorUmbrella]

Jeesus effing Christ.

All that risk and only 81%

you can achieve 76% by going limited FFS! Nothing fancy. Just expenses and dividends.

Edumicate yourself before I slap you!

Contractor Calculator - Your Expert Guide to Contracting. For UK Contractors, Freelancers, and Consultants


Your Details Rate £250
Rate Type Daily
Hours per week
Days per week 5
Weeks per year 44
Salary £8,000
Legitimate section 98 expenses £3,000
Pension contributions £0
Other income £0
Tax code 810L
Dividend percentage 100%
Personal Income Net Annual Income £42,066
Net Monthly Income £3,505

IF you are outside IR35

[thebear14]

So folks, putting aside the fact that it was unwise (but probably not illegal) to enter into such an aggressive form of tax avoidance, what are the options.

Shut down the EBT and declare the income to HMRC? Although we are pretty negative about EBT's, is it really worth putting your hands up to HMRC and paying tax when it's not strictly necessary to do so? IF HMRC defeat the scheme at some time in the future then the tax would be payable but that's a big "if".

And what would happen if someone put their hands up to using a scheme like this. Would they have to pay employer's NI? How could they because they are not an employer? Would the employer seek to recover the NI from the contractor?

What's wrong with just stopping using the EBT and report nothing to HMRC (apart from what you are required to do by law) and hoping that nothing will ever come of it?

The scheme was clearly entered into in good faith and if it was defeated by HMRC then back taxes and interest would be due. Why not just figure out how much tax is potentially owed and put that aside in an investment account for 6 years and if HMRC don't come after it during that time then the money is yours to keep.

The sticking point may be that HMRC can prove that this is a loan and the tax becomes due when the loan is written off at some time in the future (possibly when the contractor is a higher rate tax payer too) so it might cost more in the long run.

What do Bedouin say will happen if you tell them you want to get out completely? Could be an interesting question...

Thanks for the above Wanderer, essentially the sort of response I was looking for when I first posted. I'll be moving on to a Ltd therefore would assume from my tax return I will be voluntarily flagging myself to HMRC in the process, can't be helped I suppose. As you say it's all conjecture and IFs at the moment and so best thing to do is set aside the difference and if they come for it they come for it - lesson learned.

As previoulsy stated it only covers the last 5.5 months so it could have been a lot worse

Cheers again