If it seems to good to be true............80%-90% take home

[smalldog]

Despite huge rafts of Government legislation dealing with tax avoidance we still seem to have lots of people posting on here who have been tempted by the promise of high take home pay with little or no risk and the backing of QC's. The scheme providers are often very convincing and are marketed to appeal to new contractors who have little or no understanding of the UK tax system and the risks that they are running. The following have/will shortly be introduced to counteract this sort of scheme:

GAAR: General Anti Abuse Rule - The GAAR Study Group Report was based on the premise that the levying of tax is the principal mechanism by which the state pays for the services and facilities that it provides for its citizens, and that all taxpayers should pay their fair contribution. This same premise underlies the GAAR. It therefore rejects the approach taken by the Courts in a number of old cases to the effect that taxpayers are free to use their ingenuity to reduce their tax bills by any lawful means, however contrived those means might be and however far the tax consequences might diverge from the real economic position. HMRC will use GAAR to combat schemes which they feel have no purpose other than to avoid tax: the tax payer will be required to revise and resubmit self assessment forms to correct the tax position and will face penalties if they fail to do so.

Agency Legislation (ITEPA) - if a worker is resident, tax resident and working in the UK then PAYE must be applied to their earnings even if their intermediary is based offshore. If the intermediary does not properly account for taxes owed then the obligation will pass to the recruitment agency that engages with the end client. As part of the same legislation - if a worker engages with an agency then they will be liable for PAYE taxes (which can be deducted by the agency or an umbrella company) if it can be proven that they are under the supervision, direction and control of the client. Agencies will be required to report to HMRC on those workers that they believe will not meet this criteria. This legislation doesn't apply to PSC working outside IR35 as dividends are not considered income for the purposes of the legislation. One of the purposes of this legislation is to stop what is referred to as 'false self-employment' whereby a worker is engaged by an intermediary as 'self-employed' thereby removing the need for the intermediary to pay employer's national insurance.

Accelerated Payments: DOTAS : workers who have used a tax avoidance scheme registered under DOTAS will be required to pay disputed tax up front i.e. before the validity of the scheme has necessarily been tested in court. The disputed tax will be payable within 90 days.

Follower notices: These will be issued if HMRC feel that the mechanism to avoid tax has been used by another provider and defeated in court.

If you contravene any of the above you will be obliged to pay back the tax HMRC deem that you owe, with interest and possibly penalties. HMRC have already set a precedent for retrospective tax legislation - this means that you will not owe tax from the point at which the scheme you use is discredited, you will owe from when you first began using it. There have been over 1 MILLION views of this thread http://forums.contractoruk.com/accou...al-beyond.html which details the misery of contractors caught out by tax avoidance schemes and retrospective legislation. If this doesn't convince you, this entire section HMRC Scheme Enquiries is dedicated to those who have received notices from HMRC following their use of tax avoidance schemes - all of which were promised to be compliant and risk free.

If it seems to good to be true then it very probably is.

nice advert, not making a case for umbrellas by any chance?

[Old Greg]

nice advert, not making a case for umbrellas by any chance?

It could of course be said that 50% take home seems too bad to be true.

[LisaContractorUmbrella]

nice advert, not making a case for umbrellas by any chance?

You know me better than that

[Waldorf]

nice advert, not making a case for umbrellas by any chance?

I am no fan of umbrella's but people who use these dodgy schemes that Lisa has highlighted are all getting us a bad name, tarring us all with the same "tax dodging" brush, when in fact most contractors pay the tax that the taxman demands and importantly, expects.

[jbryce]

Tax that the taxman demands and expects? Use an Umbrella.

I am no fan of umbrella's but people who use these dodgy schemes that Lisa has highlighted are all getting us a bad name, tarring us all with the same "tax dodging" brush, when in fact most contractors pay the tax that the taxman demands and importantly, expects.

I used one of the dodgy schemes and will be paying the price for it - serves me right.
To be fair, the only way of being 100% sure that you are paying the 'the tax that the taxman demands and importantly, expects' is to go through a legit Umbrella Company.

Using a limited company is a means of avoiding paying tax, something that has impacted some contractors at the Student Loans company, see IR35 teams target public sector contractors | AccountingWEB. More here.

I like having my own limited company, and I strive to avoid IR35, but I am under no illusions that HMRC will, at some point, ramp up their interest in the limited company contractor. My accountant is seeing an increase in the number of investigations - with DAs raised and then left to fester.

Avoidance is immoral and limits the ability of a Government to govern effectively - well we all have our views on that, but the Government has won that PR battle. The public now have tax 'dodgers' firmly in their sights.

[LandRover]

I am no fan of umbrella's but people who use these dodgy schemes that Lisa has highlighted are all getting us a bad name, tarring us all with the same "tax dodging" brush, when in fact most contractors pay the tax that the taxman demands and importantly, expects.

I agree those using them since news of action would be taken in Finance Bill draft are bonkers carrying on, however I hope there is sympathy out there for those of us who took advice from chartered accountants that to avoid IR35 and still maintain a decent return on your earnings that EBT's, which were established vehicle of tax avoidance, was a good alternative. Hindsight is a wonderful thing, but go back a few years and many feared IR35 and other issues like Arctic Systems tax case.

[LandRover]

but the Government has won that PR battle. The public now have tax 'dodgers' firmly in their sights.

And yet they have their snouts firmly in the troughs, lol

Downing Street backs Maria Miller over expenses inquiry | Politics | The Guardian

[malvolio]

I used one of the dodgy schemes and will be paying the price for it - serves me right.
To be fair, the only way of being 100% sure that you are paying the 'the tax that the taxman demands and importantly, expects' is to go through a legit Umbrella Company.

Using a limited company is a means of avoiding paying tax, something that has impacted some contractors at the Student Loans company, see IR35 teams target public sector contractors | AccountingWEB. More here.

I like having my own limited company, and I strive to avoid IR35, but I am under no illusions that HMRC will, at some point, ramp up their interest in the limited company contractor. My accountant is seeing an increase in the number of investigations - with DAs raised and then left to fester.

Avoidance is immoral and limits the ability of a Government to govern effectively - well we all have our views on that, but the Government has won that PR battle. The public now have tax 'dodgers' firmly in their sights.

Wrong on several points. I don't use a Limited to avoid paying tax for one thing; that is a consequence of me operating a business and the taxation framework HMG put in place for limited companies. And you're not avoiding tax, you're only avoiding NICs on a portion of your income; if you work out how much you do pay in CT, generated VAT and PAYE/NICs as a total every year, it's not a good model of an avoidance scheme.

And "unacceptable avoidance" is a long way from using a limited company, and is perhaps best defined as using something that means that after fees you aren't paying any tax at all, or a perhaps a vanishingly small percentage of tax, on your gross earnings. It's not hard to work out why that's a bad idea.

And the SLC is an urban myth in that context. They were penalised for allowing senior staff who legally had to be paid under PAYE as a controlling person to go off payroll, and even getting permission from the Treasury to do so. How that equates to avoidance by the worker I cannot actually figure out.

[TheFaQQer]

And yet they have their snouts firmly in the troughs, lol

Downing Street backs Maria Miller over expenses inquiry | Politics | The Guardian

David Laws (described by Clegg as "a very decent man") was rushed back into government after he stole from the taxpayer as well.

[cojak]

Indeed, I guess if you sign up to one of these schemes now in the current climate you get what you deserve when HMRC come calling for their money, its the ones who signed up years ago and are now getting their collars felt one should be a bit sorry for...

Not really.

We've been telling them since 2006

It gives you some idea why some of the old-timers here have very little sympathy...