I always knew we were right....

[BrilloPad]

You should not have tried to screw HMRC, that's the bit where you went wrong.

errr - its every taxpayers obligation to try to screw HMRC.

[AtW]

Duty bound to your shareholders to do that (and to whom most contractors income shift as well, the other shareholder being spouse/partner).

That's rubbish - directors have a duty not to take unreasonable risks that could cost a lot of money to the company, and that most certainly means not risking fight with HMRC.

If you want to double your net income then work on doubling your revenues rather than getting taxes to 0.

[Ticktock]

So the city analysts have been getting it wrong on FTSE companies all these years have they?

So FTSE companies spend all of their income on salaries?

Yes, some do not pay dividends - the major difference is that they are public companies, so can generate value for shareholders in other ways.

[AtW]

And I bet their spouses don't share any risk in their business either.

If you want to fight on changing unfair divorce laws in this country then I'd donate some money and so will Brillo

[AtW]

errr - its every taxpayers obligation to try to screw HMRC.

There is no such obligation, quite the contract - there is obligation to pay taxes as the Parliament intended.

[eek]

I have to say some of the comments on here are shocking and show how ill-informed some people truly are......

I really suggest some people have a read of some elements of the Finance Act. Then come back and talk about the schemes being illegal as some clauses are very specific and unequivocal.

Very few schemes get closed down due to them being illegal because they are not! Schemes change due to updates in legislation as we saw in 2010 with EBT's (Montpellier being a very different set of circumstances). They get closed due to scheme users be challenged under Disguised Renumeration as I expect the current crop of EBT challenges will show and that is only because those schemes used a DOTAS reference number. Few schemes today fall under the DOTAS regime.

I also find it a total contradiction that Ltd Co. users talk about reaching 80% retention that seems fairly aggressive to me and I suspect for all the bluster most really fall under IR35 as HMRC really intended it. Oh there is a certain parallel here.... And please stop going on about running a business it's actually funny now!

As for the original post I think HMRC advice is good sound advice.

From the original IR35 statement

The Chancellor announced today that changes are to be introduced to counter avoidance in the area of personal service provision. This move underlines the Government's commitment to achieving a tax system under which everyone pays their fair share.

There has for some time been general concern about the hiring of individuals through their own service companies so that they can exploit the fiscal advantages offered by a corporate structure. It is possible for someone to leave work as an employee on a Friday, only to return the following Monday to do exactly the same job as an indirectly engaged 'consultant' paying substantially reduced tax and national insurance.

The Government is going to bring forward legislation to tackle this sort of avoidance. The Inland Revenue will be discussing the practical application of new legislation with interested parties and will work with representative bodies on the production of guidance. The new rules will take effect from April 2000.

And

3. The proposed changes are aimed only at engagements with essential characteristics of employment

A short term skills based engagement to provide consultancy advice for an end client is not characteristic of employment.

[AtW]

So the city analysts have been getting it wrong on FTSE companies all these years have they?

Shares in public companies can grow in value even if dividends not paid - Apple/Microsoft/others did not pay a lot of dividends but they accumulated lots of cash that can be paid at some point, so that and other considerations pushed value of shares upwards which created demand.

FTSE companies give better share yield than one can get in a bank now, some don't pay because they got losses.

[BrilloPad]

If you want to fight on changing unfair divorce laws in this country then I'd donate some money and so will Brillo

I am a life long member of f4j - are you?

There is no such obligation, quite the contract - there is obligation to pay taxes as the Parliament intended.

There was some legal case from about 80 years ago that said the opposite to you. Parliament intends you to pay 100% tax.

[DonkeyRhubarb]

The company that I've founded employs over 10 people now mainly on PAYE, this includes myself with appropriate salary (not minimum wage).

There are dividends but there is corp tax paid on profits.

It's all, in my view, exactly as the Parliament intended - there are no tricks and no artificial arrangements solely designed to reduce taxes which are very substantial.

If the Parliament decides in the future to put NI on dividends then so be it - I won't be changing the structure because it was not intended for tax avoidance in the first place.

Your company sounds like a proper business. Many contractor's companies are not, and the only reason they incorporate is to reduce their tax bill. Not that you'll find many admitting that, at least not on a public forum.

There is a spectrum from white to black with shades of grey in between. Your arrangements are white. Artificial/contrived schemes are black. Then there is the grey area which many myco's fall into.

[eek]

Your company sounds like a proper business. Many contractor's companies are not, and the only reason they incorporate is to reduce their tax bill. Not that you'll find many admitting that, at least not on a public forum.

There is a spectrum from white to black with shades of grey in between. Your arrangements are white. Artificial/contrived schemes are black. Then there is the grey area which many myco's fall into.

I find the agency act 1979 which forces people to use a limited service company rather than being self employed rather restricts that viewpoint. The tax reduction is a byproduct not the (legally required by law) reason.