Composite structure

[tim123]

Anyone want to respond to the above or are all of you lot just a bunch of whining, greedy, cheating code monkeys, eh?

sg in <<get the popcorn and hope for a good show>> mode.

Well I think expat's right (in principle).

Which is why I have argued before, that I don't think contractors have the moral high ground in this discussion.

I have always said that, the only reason contractors can draw dividends to pay themselves (and to share with their wives) is because the law allows them to. But they have no right to expect the law to continue to allow them to do so.

If the government of the day wants to change the law to stop it, then I don't see that there is any moral reason why they should not be allowed from so doing. It may be aminstratively dificult to achieve, but that's another issue.

However, whilst the law allows me to draw dividends, I shall continue to, as to do otherwise would be silly.

And I'm also happy to support people who wish to campaign against any changes to this 'practice', provided that they campaign in a way which recognises the Government's legitimate right to make the change that might be proposed. Frankly, many anti-IR35 campaigners did not recognise this and IMHO this is the reason that we got a dog's dinner of a law as a result.

(I also think that Tony's analogy between an EDS employee buying an EDS share or two, and someone working through an MSC, is so ridiculously stupid that I cannot believe a businessman might think that they are the same).

tim

[sasguru]

Well I think expat's right (in principle).

Which is why I have argued before, that I don't think contractors have the moral high ground in this discussion.

I have always said that, the only reason contractors can draw dividends to pay themselves (and to share with their wives) is because the law allows them to. But they have no right to expect the law to continue to allow them to do so.

If the government of the day wants to change the law to stop it, then I don't see that there is any moral reason why they should not be allowed from so doing. It may be aminstratively dificult to achieve, but that's another issue.

However, whilst the law allows me to draw dividends, I shall continue to, as to do otherwise would be silly.

And I'm also happy to support people who wish to campaign against any changes to this 'practice', provided that they campaign in a way which recognises the Government's legitimate right to make the change that might be proposed. Frankly, many anti-IR35 campaigners did not recognise this and IMHO this is the reason that we got a dog's dinner of a law as a result.

(I also think that Tony's analogy between an EDS employee buying an EDS share or two, and someone working through an MSC, is so ridiculously stupid that I cannot believe a businessman might think that they are the same).

tim

Bloody hell, if I wanted a rational answer I would ask for it. Where's all the selfish illogical ranting when you're bored eh?

[Rantor]

Dividends are capitalism's reward for investing capital that is needed for a commercial enterprise. Companies are the way to organise this enterprise, and shares in the company represent the capital that was invested.

Put in capital that is needed for a business; get back a share of the profits.

If, like mine, your Ltd Co does not need any capital to run its business, it would be dishonest to pay dividends on the so-called capital, when the capital did not make the profit in the first place. In such a case it is not Dividend Return on Capital Invested, it is merely disbursement of money earned by work, to the person who did that work, i.e. Wages.

Paying wages in the form of so-called dividends is nothing more than a ruse to avoid tax. And I'm afraid that I don't agree that it is legitimate tax avoidance. It may be legal, I am not qualified to judge. But I do know the difference between right and wrong, and disguising your wages as share dividends is wrong.

Or do you think that everything is a game with no right and wrong, where getting caught is the only mistake?

Wow, where to start!

Firstly, I don't use a UK limited any more as I have fled the country so my question resulted from the gobsmacking breadth of the assertion rather than any particular concern on my position.

I think you may have an overly constrained view on how capitalism works. The level of initial capitalisation of any corporate structure is irrelevant to how well it may, or may not, fare in the market. Thus I could set up a company with several million pounds and run it into the ground or alternatively start with knob-all and end up an filthy capitalist plutocrat. In the case of IT Services company set up (legally as you indicate) the companies generate turnover that in turn can lead to profits that are returned to the shareholder. In my case I ran a ltd for 8 yrs and the company generated healthy turnover principally, though not exclusively, by selling my services on both a pimped and direct basis.

I cannot see how, as a shareholder of a ltd company, I should be restricted from legitimately sharing in the profits of that organisation as it is legal (as you graciously concede) and, to me, is not avoidance either.

I think the staggering aspect of your reply is the assumption that you are sufficiently morally self-assured to cast an absolute judgement on a matter that is highly subjective. I have firm views on tax and the relationship between individuals and the state that I generally don't go in to and no I do not regard it as a game. However, I generally deem to concede a minimum of control over my affairs to any state.

BTW - If you are so sure of yourself it is probably best to stay away from religion

[wendigo100]

Paying wages in the form of so-called dividends is nothing more than a ruse to avoid tax.

In many cases, true.

And I'm afraid that I don't agree that it is legitimate tax avoidance.

You are incorrect. Tax avoidance is legitimate by definition.

[expat]

In many cases, true.You are incorrect. Tax avoidance is legitimate by definition.

No, that was exactly my point. You are confusing legal with legitimate.

[expat]

I think the staggering aspect of your reply is the assumption that you are sufficiently morally self-assured to cast an absolute judgement on a matter that is highly subjective. I have firm views on tax and the relationship between individuals and the state that I generally don't go in to and no I do not regard it as a game. However, I generally deem to concede a minimum of control over my affairs to any state.

That's all very well. My comments were aimed at those who just want to pay less tax. That's not, for most of them, a principle, just a grubby piece of amoral selfishness.

Absolute judgements are the only worthwhile ones. I'm sure of that.

[wendigo100]

No, that was exactly my point. You are confusing legal with legitimate.

le·git·i·mate (lə-jĭt'ə-mĭt) Being in compliance with the law; lawful

le·gal (lē'gəl) In conformity with or permitted by law:

You are splitting hairs.

[BoredBloke]

"I also think that Tony's analogy between an EDS employee buying an EDS share or two, and someone working through an MSC, is so ridiculously stupid that I cannot believe a businessman might think that they are the same"

I never said they were the same. A share is a share is a share and it gives rise to a percentage of the organisations profits. The point I was trying to make is why is the employee of one organisatoin allowed to buy a share and benefit from it while the employee of another is not.

[expat]

le·git·i·mate (lə-jĭt'ə-mĭt) Being in compliance with the law; lawful

le·gal (lē'gəl) In conformity with or permitted by law:

You are splitting hairs.

legitimate

• adjective /lijittimt/ 1 conforming to the law or to rules. 2 able to be defended with logic or justification: a legitimate excuse.

-- Oxford dictionary.

[simondolan]

"I also think that Tony's analogy between an EDS employee buying an EDS share or two, and someone working through an MSC, is so ridiculously stupid that I cannot believe a businessman might think that they are the same"

I never said they were the same. A share is a share is a share and it gives rise to a percentage of the organisations profits. The point I was trying to make is why is the employee of one organisatoin allowed to buy a share and benefit from it while the employee of another is not.

I think the easiest distinction is that the employee in EDS (of which there will be comparatively few that hold shares) will benefit from the success of the Company as a whole. Also, comparatively little of the income will be paid via dividends.

Contrast this with composite employee who gets most of their income in dividends, who's dividend is directly related to what he/she brings in, and who cannot profit from the success of the Company as a whole.