Starbucks

[BlasterBates]

d000hg makes a good point.

If you actually took a reasonable salary from your Ltd (instead of 4K), kept some money in the company and paid yourself some dividends no-one would be "hounded".

In any case when you look at the number of contractors being chased for IR35 it is pitifully small.

There's more of a perception of being hounded.

If you're outside IR35 you won't be hounded anyway it will just be a routine enquiry.

[tractor]

I'm not talking about 'they'. I'm talking about how people on CUK, who avoid tax and think this is defendable, are complaining about corporations using their own tax avoidance strategies.

If we are within our rights to avoid tax within the law, so are Starbucks.

What you say is absolutely true.

But we are not treated equally and this is what sucks. If they left us alone as they do Starbucks and Amazon, I would be happy.

[tractor]

d000hg makes a good point.

If you actually took a reasonable salary from your Ltd (instead of 4K), kept some money in the company and paid yourself some dividends no-one would be "hounded".

In any case when you look at the number of contractors being chased for IR35 it is pitifully small.

There's more of a perception of being hounded.

If you're outside IR35 you won't be hounded anyway it will just be a routine enquiry.

Yes, he does. Perhaps hounded was the wrong word. Forced to play cat and mouse is probably closer, I guess

[Scoobos]

No I don't. I make the assumption that most of us took the Ltd route as the only sensible option, and subsequently use the Ltd to avoid tax... if you take dividends you are avoiding tax just as I am.

Fair enough d000hg, I got the wrong end of the stick

[vetran]

If most Contractors made a tax loss every year by setting their costs to the offshore mothership so they avoided paying tax anywhere the Doohg would have a point. They don't, they reduce their tax to 30 - 40% by using totally legal methods available to all other businesses.

If its reasonable that permie like contractors should pay tax in similar percentages to permies (I think it is assuming that the percentage is set with reference to the benefits that they receive) then a clear cut method of calculating who has to pay is required. Currently the decision contains 'opinion' and therefore its bad law.

By all means compare the Contractors using EBT's with Starbucks, but those using the LTD company vehicle to reduce tax like any other are a different league.

[Ignis Fatuus]

The thing is you might be paying employer's NI but the employer isn't instead, so you can just negotiate more money.

I am afraid that I agree with Robinho here.

The client is also not having to pay for pension, holidays, sick leave, p/maternity leave, training, bench time, or travelling expenses, so they should hand all that money over to your Ltd Co as well.

Add in a substantial reward for the risk of not finding or keeping work, a bit of HR-type costs for doing all the admin yourself and not needing HR or personnel management, and a premium for ticking all the boxes on the requirement and hitting the ground running, and you should obviously be making a shedload more on your rate as a contractor than a permie salary. If you're not, you are colluding with the employer in shafting you. If you can't do anything about that, then the contract itself is a duff one and shouldn't be done: the market should select against the client's doing it, by not providing a contractor willing to work for too little.

[vetran]

If you're not, you are colluding with the employer in shafting you. If you can't do anything about that, then the contract itself is a duff one and shouldn't be done: the market should select against the client's doing it, by not providing a contractor willing to work for too little.

if it were a fixed supply market then that would be true, however we are in a dwindling demand expanding supply market in most volume areas.

[d000hg]

If most Contractors made a tax loss every year by setting their costs to the offshore mothership so they avoided paying tax anywhere the Doohg would have a point. They don't, they reduce their tax to 30 - 40% by using totally legal methods available to all other businesses.

Just because we avoid tax a different way doesn't make their way immoral and ours OK, it just means we have different tools available... we're abusing the business laws on the ultra-small side where they don't fit very well, they're abusing them at the opposite end of the scale.

What they do is every bit as legal as what we do. There is no high horse to ride on here.

[BlasterBates]

In fact contractors could emulate Starbucks if they can organise their work like Starbucks do and HMRC would be hard pressed to get at them.

1) get a fixed priced contract, so you have control over your work
2) set up an office in the Isle of Man, i.e. do some work there and demonstrate you do some work there.
3) charge out to your UK Ltd from the Isle of Man.

Your Isle of Man company makes a lot of profit but your UK doesn't.

Watch HMRC squirm powerlessly.

Now I presume there are HMRC guidelines on transfer pricing, though I'm not sure but provided you adhere to them it should be prefectly legal. From what I understand this is bascially what Starbucks have done.

Now lets not confuse a perfectly valid way of avoiding tax with a dubious way, i.e. getting a loan "wink wink, nudge nudge".

[doodab]

In fact contractors could emulate Starbucks if they can organise their work like Starbucks do and HMRC would be hard pressed to get at them.

1) get a fixed priced contract, so you have control over your work
2) set up an office in the Isle of Man, i.e. do some work there and demonstrate you do some work there.
3) charge out to your UK Ltd from the Isle of Man.

Your Isle of Man company makes a lot of profit but your UK doesn't.

Watch HMRC squirm powerlessly.

Given that we operate "personal service companies" one could argue that we are our brand, and there is no reason why we couldn't sell the rights to that to an overseas entity and use exactly the same transfer pricing tricks that starbucks use to avoid UK corporation tax.

The problem is repatriating the money. One presumes that dividends from starbucks shares are subject to UK tax when you receive them?