Budget - Composite Companies Dead!

[hattra]

So if I set up a Ltd, and outsource all the accounting and payroll stuff to an accountancy company (I'm not good at the paperwork side, so employ someone who is), and continue to operate in exactly the same way as now, remaining outside of IR35 on a contractual and operational basis etc, I'm treated differently for tax purposes.

Or maybe I just become a director of the company I already legally own 100% (i.e. my bit of the composite).

[tim123]

Not all MSC's used dodgy expenses to bump up the take home pay.

No they don't. But Gordo has decided that as:

a) it's too hard to catch the ones that do

b) there is no legitimate business case for MSC's,

they should be legislated against.

So, tought titties on the ones that were legit, the industry should have tried harder to put their house in order (and running scared when someone threatens to serve a writ for doing nothing more than "correctly suggesting that company X is doing something illegal", is "not trying hard enough").

tim

[tim123]

What do you consider a "high level".

When I was back in permieland, I used to be able to claim an un-receipted daily allowance when travelling on company business, to cover "incidentals", that was actually more (in real terms) than I claim now - I think it's still quite common practice - are permanent staff going to have to pay tax on that now.

1) you presumably only did this one day a month or so. Not every day of the month.

2) You were not in the position of selecting a specific job, based upon whether you got a jolly out of it. The trips were incidental you day to day job, not the journey that you made to get to your job.

tim

[BoredBloke]

"No they don't. But Gordo has decided that as:

a) it's too hard to catch the ones that do


Utter Bolloxs I'm afraid. The ones which did this were the ones who actively promoted their dispensations - granted by the IR and so not difficult to weed out. This whole thing about the reciepts was of the revenues making. If they wanted to stop this practice all they had to do was cancel the dispensations.

[Money Money Money]

Bloody hell Simon, bit quick to take full advantage of this aren't you?

Thought it was just a PRE budget report???

As a result of this announcement, ALL Contractors and Freelancers who use a Managed Service Company, Composite company or employment services company e.g. Giant, Brooksons, Parasol IT or Prosperity 4 will no long be able to claim any expenses.

[malvolio]

"No they don't. But Gordo has decided that as:

a) it's too hard to catch the ones that do


Utter Bolloxs I'm afraid. The ones which did this were the ones who actively promoted their dispensations - granted by the IR and so not difficult to weed out. This whole thing about the reciepts was of the revenues making. If they wanted to stop this practice all they had to do was cancel the dispensations.

You totally miss the point that virtually all large companies (and a lot of small ones) have an expenses dispensation, so you can't use that as a separator and they all make it clear (to a greater or lesser extent) that it makes no odds to them how you charge expenses but you need to manage your affairs properly. I don't think advertising slogans should be the cause for a tax investigation.

Commercially there is little real reason for an MSC other than as a tax avoidance; the major proportion of their clients are not interested in business efficiency as much as they are in not paying NICs.

[BoredBloke]

Yes big companies do that - I am aware of this fact. But the point which was made was that it would be too difficult to police those abusing the dispensation. That wouldn't be difficult at all. Firstly there are not millions of MSC operators out there. They don't hide away as they have to advertise to gain members. So generating a complete list of these would not be a difficult task at all. Within this number there will be a chunk who have dispensations. This could well be all of them. Within that number there will be a number encouraging their members to abuse the system. Everybody on here knows the P4 business model. If we knew it, then presumably the IR knew it also. So why didn't they act.

It is quite wrong to tar all the MSC's out there with the P4 brush. It's all academic now anyway.

[stackpole]

You tell 'em TE! I'm backing you because you've had plenty of time at "work" to read up on it.

[malvolio]

It is quite wrong to tar all the MSC's out there with the P4 brush. It's all academic now anyway.

I'm not. Your proposal was to target some MSCs on some arbitrary basis. Expenses isn't the problem, which is why dispensations are a complete red herring. A company paying dividends to a pretend "shareholder" who has no other interest in the company is the problem.

[wildstyle]

Bloody hell Simon, bit quick to take full advantage of this aren't you?

Thought it was just a PRE budget report???

As a result of this announcement, ALL Contractors and Freelancers who use a Managed Service Company, Composite company or employment services company e.g. Giant, Brooksons, Parasol IT or Prosperity 4 will no long be able to claim any expenses.

I have had a chat to Parasol about this already and they state they are unaffected by this. They state you will still be able to claim schedule E expenses as the payment is taxed at source.

I guess the jurys out for a while.

I'm going to wait til after christmas and speak to my tax advisor.