I always knew we were right....

[LisaContractorUmbrella]

Avoidance is the more serious crime though.

In reality or media world

[fullyautomatix]

I don't think you have a complete understanding - EBT's have been outlawed under the terms of the Disguised Remuneration legislation but other schemes involving loans, however morally wrong, are tax avoidance and not evasion and are therefore not illegal. A product which is offered by tax planners that operates within existing tax law can be tested by HMRC if they believe that it gives an advantage to the tax payer that was never intended by Parliament but the structure itself will not necessarily be illegal. Don't get me wrong - I think these schemes that promise 80%-90% take home are just going to bring grief to contractors who decide to use them but there is a distinction between avoidance and evasion.

Also, compliant umbrella companies pay many millions each year in PAYE contributions why would HMRC want to outlaw them

Why is a scheme involving loans legal ? Is it because you are peddling them ?

Ridiculous !

[cojak]

Why is a scheme involving loans legal ? Is it because you are peddling them ?

Ridiculous !

Now I know your taking the mickey!!

[LisaContractorUmbrella]

Why is a scheme involving loans legal ? Is it because you are peddling them ?

Ridiculous !

I think you know me better than that

[Ondine]

I don't think you have a complete understanding - EBT's have been outlawed under the terms of the Disguised Remuneration legislation but other schemes involving loans, however morally wrong, are tax avoidance and not evasion and are therefore not illegal. A product which is offered by tax planners that operates within existing tax law can be tested by HMRC if they believe that it gives an advantage to the tax payer that was never intended by Parliament but the structure itself will not necessarily be illegal. Don't get me wrong - I think these schemes that promise 80%-90% take home are just going to bring grief to contractors who decide to use them but there is a distinction between avoidance and evasion.

Also, compliant umbrella companies pay many millions each year in PAYE contributions why would HMRC want to outlaw them

Perhaps your right, I'm no expert when it comes to tax. I see your point about EBT's outlawed under the disguised remuneration legislation. But how can a dodgy offshore loan trust arrangement be legal?

Especially when most of these offshore umbrella providers (Isle of Man, etc) aim to minimise or avoid liability to income tax (and PAYE) and employers’ National Insurance Contributions (NICs).”

It's pretty clear to me what's going on! As you pointed out, some of these Offshore schemes offer rates as high as 85% - 90% of your contract?

Contractors receive a small basic salary (something around the minimum wage level) with the remainder of their income coming to them via a loan. Surely this must sound alarm bells to HM revenue and customs. People use these schemes on the premise that they will never be investigated – there's name for that - Russian roulette! Correct me if I am wrong, but your only pay tax if the loan is written off?

A year ago I was introduced to one of these providers by a fellow contractor, that sang their praises. When I ask the crucial question, what happens if and when the loan gets written off? The provider said, "don't worry, it never gets written off". Does this sound legal?

[Ondine]

Also, compliant umbrella companies pay many millions each year in PAYE contributions why would HMRC want to outlaw them

I agree that UK Payroll umbrellas shouldn't be tarnished with the same brush as dodgy offshore umbrellas.

But Not all UK payroll umbrellas are compliant, Contractor Umbrella may be, but quite a few aren't. One of my friends was refused a mortgage because her pay slip raised more questions than answers. That's why I think Umbrella Companies may have a limited existence.

Is Contractor Umbrella related to SJD Accounting?

[Ondine]

Here's an interesting question

How on earth do people operating through an Offshore Umbrellas prove their earnings for affordability when they're applying for a mortgage or finance?

They're P60 and tax returns only show a small minimum wage salary, so how do they do it. Self cert Mortgages were banned a few years back?

I suppose they can't get a loan unless they're buying a shed.

[BrilloPad]

How on earth do people operating through an Offshore Umbrellas prove their earnings for affordability when they're applying for a mortgage or finance?

They're P60 and tax returns only show a small minimum wage salary, so how do they do it. Self cert Mortgages were banned a few years back?

I suppose they can't get a loan unless they're buying a shed.

How do most contractors do it on minimum wage? Believe it or not dividends do count towards a mortgage.

[Ondine]

How do most contractors do it on minimum wage? Believe it or not dividends do count towards a mortgage.

That's assuming that they're using a Limited Company, but most aren't. In the majority of cases, the payment made in the form of a loan trust is paid directly into their personal bank account.

Don't UK lenders only look at UK taxable earnings?

[BrilloPad]

That's assuming that they're using a Limited Company, but most aren't. In the majority of cases, the payment made in the form of a loan trust is paid directly into their personal bank account.

Don't UK lenders only look at UK taxable earnings?

No.

HTH