Budget - Composite Companies Dead!

[MobileCheese]

Do you have link to the published document.

From an early post in this thread its the link to site and on there is the pdf.. Seems link doesnt work not but search for managed service in the search thing and it comes up

http://www.hm-treasury.gov.uk/pre_b...gedservices.cfm

page 35 interesting quote about getting employee rights.

[donaldduke]

From an early post in this thread its the link to site and on there is the pdf.. Seems link doesnt work not but search for managed service in the search thing and it comes up

http://www.hm-treasury.gov.uk/pre_b...gedservices.cfm

page 35 interesting quote about getting employee rights.

Thanks for link.

My reading of it is as follows.

MSC were allowed to decide (subject be being challenged by IR ofcourse) if a worker was inside or outside IR35 and pay dividends or PAYE accordingly.

But the IR thinks that most MSCs were too easily saying outside IR35, and the IR doesnt have the resources to review one million contracts a year (250,000 x 4 contracts a year) to prove otherwise.

The reason the IR thinks this way is that they have stricter interpretation of what contracts are inside or outside IR35 compared to anyone else.

So they have now decided that all workers using MSCs will now pay full PAYE because invariably most should be caught anyway.

If your past MSC contracts can withstand IR35 i dont think they can retrospectively come after you using the 'going after the third party to get the tax owed' clause as you dont owe any tax.

Even if you were caught by IR35 its unlikely they will come after you retrospectively as there are just too many contracts to review.

[malvolio]

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.

Nothing to do with IR35, everything to do with tax avoidance. In Gordonworld, avoidance is a bad thing and should be stamped out. Using a corporate structure where you have no responsibility or authority just to put yourself in the box marked "Limited Company with shares" means you are not in business and so are employed by 'someone' (don't care who, except it's not you) and so should pay full rate tax. After all, if you take no business risk, why should you benefit from business-style tax breaks? Retrospective action is also unfair, but the option has been retained and they don't do things like that unless they plan to use them

[wendigo100]

If your past MSC contracts can withstand IR35 i dont think they can retrospectively come after you using the 'going after the third party to get the tax owed' clause as you dont owe any tax.

Even if you were caught by IR35 its unlikely they will come after you retrospectively as there are just too many contracts to review.

Unless they say "caught" to all of them and put the onus on each individual contractor to appeal it.

[MobileCheese]

We just dont know whats going to happen to be honest, only assumptions we can make with confidence is they will want there money. I'm in the same position as a few others here and potentially owe a lot of money, I was netting around 68%. I didnt really sleep last night worrying about it but nothing you can do now .

[bobhope]

I thought IR35 was meant to net about £500m a year? But the last time HMRC were asked they said that they didn't keep any figures on it.

[simondolan]

We just dont know whats going to happen to be honest, only assumptions we can make with confidence is they will want there money. I'm in the same position as a few others here and potentially owe a lot of money, I was netting around 68%. I didnt really sleep last night worrying about it but nothing you can do now .

No need to worry - I've read through the whole 72 page document about this and the implementation will take place from 6th April 2007. There is no suggestion of any backdating.

[MobileCheese]

My office is actually next to a revenue office, I can look in and see them and they can look into mine and see my arse

[tim123]

Nothing to do with IR35, everything to do with tax avoidance.

It has to be said that wrt the 'expenses' position, this is about evasion.

tim

[BoredBloke]

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