I always knew we were right....

[AtW]

I don't think the risk of losing one months pay is significantly reduced

It's reduced significantly by not having intermediary who might not be as keen chasing money from your client as you would.

For me being able to spread out earned money in good days over bad days would be of very high significance, so Ltd would be essential. Now if it cost MORE in tax than umbrella then I'd have to think about benefits vs costs, but all things equal I'd prefer Ltd.

[BrilloPad]

It's reduced significantly by not having intermediary who might not be as keen chasing money from your client as you would.

For me being able to spread out earned money in good days over bad days would be of very high significance, so Ltd would be essential. Now if it cost MORE in tax than umbrella then I'd have to think about benefits vs costs, but all things equal I'd prefer Ltd.

I think it is disgaceful that you are arranging your affairs to minimize tax. Evading scum.

[AtW]

I think it is disgaceful that you are arranging your affairs to minimize tax.

And when did I do that?

And which taxes did I evade?

[eek]

So it is true that contractor companies came into widespread use as a tax mitigation measure, they were a direct response to the agency legislation. Prior to that contractors had been sole traders.

Employment Protection (Consolidation) Act 1978 is the law we are looking at. It is employment law and so has nothing to do with HMRC. The tax benefits were just a side effect.

[Ondine]

What an interesting thread. I also don't believe in retrospective taxation. Brillo has a point here.

Tax avoidance is legal - e.g LTD Companies.

Blatant tax evasion like EBT Schemes, dodgy Loan Trust schemes, Isle of Man Umbrellas - Basically facilitate TAX EVASION. This is wrong and illegal.

I also predict that in 5 years time all UK Umbrella companies will also be outlawed by the revenue.

As for Multi-Nationals, corporations, etc... They will always get away with tax evasion, it's always been the way. Unlikely to ever change. That's politics.

Who said the world was fair.

[LisaContractorUmbrella]

What an interesting thread. I also don't believe in retrospective taxation. Brillo has a point here.

Tax avoidance is legal - e.g LTD Companies.

Blatant tax evasion like EBT Schemes, dodgy Loan Trust schemes, Isle of Man Umbrellas - Basically facilitate TAX EVASION. This is wrong and illegal.

I also predict that in 5 years time all UK Umbrella companies will also be outlawed by the revenue.

As for Multi-Nationals, corporations, etc... They will always get away with tax evasion, it's always been the way. Unlikely to ever change. That's politics.

Who said the world was fair.

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

[BrilloPad]

What an interesting thread. I also don't believe in retrospective taxation. Brillo has a point here.

Tax avoidance is legal - e.g LTD Companies.

Blatant tax evasion like EBT Schemes, dodgy Loan Trust schemes, Isle of Man Umbrellas - Basically facilitate TAX EVASION. This is wrong and illegal.

I also predict that in 5 years time all UK Umbrella companies will also be outlawed by the revenue.

As for Multi-Nationals, corporations, etc... They will always get away with tax evasion, it's always been the way. Unlikely to ever change. That's politics.

Who said the world was fair.

Many thanks Sir/Madam. Ive been getting fed up taking on the trolls on my own.

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

HMRC view those that use umbrellas as disguised employees who should take their contract income as salary with no expenses allowed. After all, contractors are glorified typists. The government has set out to undermine the IT industry for years.

[eek]

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

I think she saw the news about the umbrellas avoiding NI by pretending to be offshore and assumed all umbrella companies worked that way.

While I would never use one, an umbrella company serves a purpose for many people. To avoid pain they usually follow HMRC rules far more tightly than other accountants would and hence HMRC don't have problem with the vast majority of them simply because they just follow the rules.

And from the other side many companies just use agencies to bring staff on board. They recruit casual labour via agencies and the best eventually get a proper contract.

[LisaContractorUmbrella]

I think she saw the news about the umbrellas avoiding NI by pretending to be offshore and assumed all umbrella companies worked that way.

While I would never use one, an umbrella company serves a purpose for many people. To avoid pain they usually follow HMRC rules far more tightly than other accountants would and hence HMRC don't have problem with the vast majority of them simply because they just follow the rules.

And from the other side many companies just use agencies to bring staff on board. They recruit casual labour via agencies and the best eventually get a proper contract.

Oh ok thanks Eek. I must say I do find it annoying when people lump all umbrella companies under the same.....oh you know what I mean

[DonkeyRhubarb]

...but there is a distinction between avoidance and evasion.

Avoidance is the more serious crime though.