Budget - Composite Companies Dead!

[Lucy]

That's from the budget in 2004 where they announced that any closed tax loopholes in the future could be backdated to December 2004.

To be honest, this targetting of composites and the fact that the tax will be backdated to 2004 has been common knowledge for a while (they even pre-announced that they were going to announce it in the last budget). Not sure I have any sympathy for anyone who has joined a composite since then...

Composites should be penalised in some way also, they are meant to be the 'so called' experts...

[Lucy]

I bet if we take London separately PPP will be even worse than 19th?

Probably, I've lived in the US, NZ, Australia and HK and I've never felt so poor.

[Cowboy Bob]

Composites should be penalised in some way also, they are meant to be the 'so called' experts...

Not sure I agree with that. They're businesses and have nothing to be penalised for really if they pay all their taxes. It's up to the individual contractor to make sure that their taxes are fully paid and correct - and saying "I didn't know" doesn't wash, it's their obligation to find out.

The only composites who should be penalised are those that commit the expenses scam, but that's a completely different matter.

[malvolio]

Moving from MSC to Your Ltd should not point towards IR35, in part because MSCs will become immune from IR35.

Huh? Does not compute - not least because users of MSCs will be paying the same NICs and PAYE as regular employees anyway so there is no practical difference.

However, if you were previously working in an arrangement that was clearly an artificial tax avoidance measure (Mr Brown's words, not mine), and therefore "falsely" declaring yourself as a non-employee, shifting to a Ltd would in Hector's eyes merely be continuing the avoidance by another means, so he will use IR35 instead.

[Lucy]

Not sure I agree with that. They're businesses and have nothing to be penalised for really if they pay all their taxes. It's up to the individual contractor to make sure that their taxes are fully paid and correct - and saying "I didn't know" doesn't wash, it's their obligation to find out.

The only composites who should be penalised are those that commit the expenses scam, but that's a completely different matter.

Well, if 'I don't know' I go to an expert, for the same reason as I don't perform surgery on myself. Composites offer solutions and promise their legitimacy, as a doctor says he knows how to take out my appendics, I believe him.

It's not a case of ignorance is no excuse, it is a case of I know I don't know so I am asking for some professional advice.

[Cowboy Bob]

Well, if 'I don't know' I go to an expert, for the same reason as I don't perform surgery on myself. Composites offer solutions and promise their legitimacy, as a doctor says he knows how to take out my appendics, I believe him.

It's not a case of ignorance is no excuse, it is a case of I know I don't know so I am asking for some professional advice.

You don't ask the provider of a service if they provide the best service, you ask an independent expert, ie. an accountant. Of course the composite is going to say that they're the best solution, they're trying to sell you something.

It's not the same thing as a doctor, they're not selling you anything. It's like how if you're going to get a mortgage you go to an IFA, you don't just walk into any old high street lender and sign up at the first one that offers you one. Same thing applies with your payment arrangements. This is your long term financial future, don't ever trust "expert advice" from a salesman.

[wendigo100]

Well, if 'I don't know' I go to an expert, for the same reason as I don't perform surgery on myself. Composites offer solutions and promise their legitimacy, as a doctor says he knows how to take out my appendics, I believe him.

It's not a case of ignorance is no excuse, it is a case of I know I don't know so I am asking for some professional advice.

Try telling that to Arctic Systems.

The expert advice they received was the same as everyone received from any accountant, and was supported by the IR/HMRC - until IR/HMRC suddenly changed their minds!

Even expert advice from God is worth nothing if HMRC decides to disagree with it!

[Lucy]

You don't ask the provider of a service if they provide the best service, you ask an independent expert, ie. an accountant. Of course the composite is going to say that they're the best solution, they're trying to sell you something.

It's not the same thing as a doctor, they're not selling you anything. It's like how if you're going to get a mortgage you go to an IFA, you don't just walk into any old high street lender and sign up at the first one that offers you one. Same thing applies with your payment arrangements. This is your long term financial future, don't ever trust "expert advice" from a salesman.

If the composite is made up of accountants, there is good reason to believe they are applying their expert knowledge.

It is the same as a doctor, in most other countries they are not 'free'.

[Ivor1]

Huh? Does not compute - not least because users of MSCs will be paying the same NICs and PAYE as regular employees anyway so there is no practical difference.

However, if you were previously working in an arrangement that was clearly an artificial tax avoidance measure (Mr Brown's words, not mine), and therefore "falsely" declaring yourself as a non-employee, shifting to a Ltd would in Hector's eyes merely be continuing the avoidance by another means, so he will use IR35 instead.

The problem is the consulation document makes a sweaping statement that more or less everyone working through a composite is an employee regardless of there contract, when in fact they could of been outside of IR35.

The retro applying of tax really sits uncomfortable with me in this case. The government has got to bare some responsibility for the rise of composite companies, but as we everything else they wont.

[sasguru]

Probably, I've lived in the US, NZ, Australia and HK and I've never felt so poor.

Aye. It's not how much you earn, it's what you HAVE to spend ...