Is Powerhouse a Giant?

[IR35]

I am soon to be starting my first contract and have been investigating my options. The contract is agreed for a period of six weeks, with a view to extending this after this time depending on the circumstances.

I won't bore everyone with the usual details, but I have settled on using an umbrella company, but now have the task of deciding which one. To the newbie, as I am, this can present somewhat of a minefield as there seems to be plenty of companies out there eager for one's business, and they're not shy about selling themselves.

From what I have read on this noticeboard and what I have managed to source from Google and the like, it does seem that the services that umbrella companies offer varies, as does the commision they charge.

On advice from a recruitment agent I investigated a company named Giant. They offer a service called Powerhouse which does seem a little good to be true, but I am curious to know if anyone has had any experience/dealings with this company and service (forgive me if this topic has previously been covered - I searched discussion board and found no references.)

Bottom line is that using this service for myself is approx. 25% more lucrative - obviously a tempting prospect. From what I understand, this is achieved through Giant operating a Ltd company on one's behalf in the usual contract manner, and providing insurance if Gordon knocks on the door investigating tax discrepancies.

The general concensus of opinion I have gleaned from reading various threads in this discussion board seem to treat any novel way of traversing IR35 with an air of scepticism, however I am obviously hoping that someone may be able to advise to the contrary.

Any advice/suggestions gratefully received.

[planetit]

I used Giant as an accountant (not an umbrella) and they were useless. They cost me a great deal of stress and time putting their mistakes right. They would never even discuss the poor service with me. I would never use them for anything ever again. I especially wouldn’t hand over all my money to them and hope to get the right amount back (which is what you do in an umbrella).

Lots of agents recommend Giant, but I guess they are on commission.

There is an umbrella company which lots of people on here speak highly of. Can’t remember the name as I don’t use them. A search should make it obvious.

[rebeccaloos]

I have used Giant Powerhouse for 18 months, I have to say I have been very happy with their service - have never been paid late, except the first payment when they have taken ages getting the contract "IR35-approved" (they use Qdos)
They are quite hard to get in touch with on the phone, but persistence usually pays, I found
They have been quite poor at explaining exactly how much they are taking in PAYE, EE NI, ER NI etc but eventually I worked it out myself
Their deal is good but don't forget that in the end, you are still left to pay over to the IR the difference in tax between the high rate (32%?) and the Corporation tax (19%) on what they pay you as dividends. It is still a decent return though, much better than normal umbrellas.
Not quite in EBT territory in terms of takehome pay as percentage of chargeable rate but still not bad - I usually got between 78% and 81% depending on non chargeable expenses

I haven't used them as accountants so can't comment on their competence in that area

But I have to say that contrary to other comments posted on this board, I have never foudn them to be a problem as far as being paid goes. They always have paid on time, straight after collecting the money from the agency.

[BlasterBates]

Their deal is good but don't forget that in the end, you are still left to pay over to the IR the difference in tax between the high rate (32%?) and the Corporation tax (19%) on what they pay you as dividends. It is still a decent return though, much better than normal umbrellas.

hmm, do you pay 32% tax on some of your earnings ?

[rebeccaloos]

well the point is that you initially only pay 19% corporation tax on dividends, however the IR will want additional revenue since your total earnings will in all likelihood make you a 22% rate taxpayer and possibly a 40% rate taxpayer too - but you've already paid 19% on all your dividends so you will only have to pay the difference to the IR - a part at 22%-19% and a part at 40%-19%

[planetit]

Rebecca,

you’re taking nonsense. And I suspect that Giant told you this nonsense. Which is what I would expect from Giant.

[rebeccaloos]

so how much tax do you pay on your dividends, Planetit?

[basilspinone]

so what exactlya re the rules on dividentds and tax then?

does anyone have a definitive answer?

[rebeccaloos]

no actually Planetit was right, I am talking nonsense

However, with Giant Powerhouse there is still a thing to pay to the IR that hasn't been collected through the Giant payslips yet. The way I understand is (might be wrong): if you are paid a low salary (on which you pay only the basic rate of tax) and dividends on top (taxed at 19%), the IR will then want to tax your low basic salary at 22% or 40% rather than the 10% you originally paid, because now the total of your earnings make you not a basic-rate taxpayer any more but a higher-rate taxpayer - so they'll want to take: ((22-10)/100)*SALARY or ((40-10)/100) * SALARY

I think
>D

[planetit]

no actually Planetit was right, I am talking nonsense

Glad we agree.

But you're still wrong. If you pay tax at the basic or starting rate the dividend tax credit meets your tax bill (so no more for you to pay personally). If you pay tax at the higher rate the dividend is taxed at 32.5%.

You were actually closer with your first answer, because your second one suggests that when you go over the higher rate threshold you lose all your starting and basic rate allowance. This is not true. I suggest you ask Giant for an explanation of how this all works. Then ditch them and use a proper company.