BN66/S58 update

[DonkeyRhubarb]

However 2 contractors who do same job but one uses offshore scheme should not expect to pay 3.5% tax when the other one pays 40%.

I don't know of many contractors running their own companies who pay an effective rate of 40%. Many I know claim to be able to retain 75% through their company ie. effective rate of 25%.

It might be splitting hairs but the BN66/ebt/loan schemes typically offered a retention of around 85%. 10% went to the promoter in fees; 5% to the exchequer.

That's why I can't comprehend why anyone would use a scheme these days. If you want to avoid tax go Ltd - the risk/reward is a lot better.

[vetran]

There are highly paid pros who find new loopholes and HMRC is tired of this bulltulip.

That's their job and they aren't very good at it.

Almost every multinational is passing money through tax havens.
The City traders were using EBTs for years.
HMRC can't get most peoples tax right.

You missed the important part :

WE WILL PAY MORE TO GET THIS MONEY THAN IS DUE.

its not a moral issue its a realism issue.

They are just putting the frighteners on and get the low hanging fruit. -is that moral?

[BolshieBastard]

No. I know I'm not. I don't fulfil any of the criteria. Even my payment terms are 90 days.
HTH BIKIW.

I think you'll find only an hmrc tax tribunal can legally determine your IR35 status and not whatever (artificial) means you use to determine yourself to be 'outside.'

[AtW]

I think it say a lot about your selfishness and yourself than anything else but each to their own.

Says the guy who paid 3.5% income tax when others paid 40%!

[sasguru]

What the HMRC should really do for contractors who are disguised employees (and that criteria is fairly easy to define IMO: e.g. immediate payment terms, no advertising spend, more than 1 year contracts, single "client" at any time) is offer them a proportional to gross earnings, fixed rate tax free lump sum to compensate for not having sick pay, pension, training and other permie benefits.
And this should be a relatively generous tax-free sum.
All other earnings to be taxed as if you were on permanent salary.
But hey that would be too easy

[DonkeyRhubarb]

Says the guy who paid 3.5% income tax when others paid 40%!

Are there many contractors here who pay an effective rate of 40%? That is, you only retain 60% of gross. I assume you can get nearly that in an umbrella.

[AtW]

I don't know of many contractors running their own companies who pay an effective rate of 40%. Many I know claim to be able to retain 75% through their company ie. effective rate of 25%.

So how those contractors of yours dodging corporation tax of 20%?

[ZARDOZ]

Here's a good summary from Freelance supermarket,,,

The case for BN66 being retrospective
1.
The wording of BN66 explicitly stated that the changes introduced were "treated as having always had effect", and is therefore retrospective

2.
The idea of being able to "clarify, retrospectively, legislation" introduced years before sets a dangerous precedent. It could give HMRC free reign to 'clarify' other existing schemes

3.
The HMRC knew about such schemes for several years. Therefore they should have acted sooner. If they are that confident in the legislation, why clarify it at a later date so that it "has effect as intended"?


The case against BN66 being retrospective
1.
The legislation is not retrospective as it simply ensures that existing legislation is being correctly applied and seeks to ensure that the spirit of the law is upheld

2.
Action didn't happen sooner because details of the scheme only came to light in 2004 when new disclosure laws came into force

3.
The "loophole" that was being used never actually existed. Therefore there is no need to close it and apply legislation prospectively (i.e. from the date it is passed). The legislation is there and is just being applied correctly



Seems to me they owe from at least 2004.

[cailin maith]

Contractors and permies are not indeed in same circumstances.

However 2 contractors who do same job but one uses offshore scheme should not expect to pay 3.5% tax when the other one pays 40%.

Hang on..... why is it ok for Permies to pay more tax than Contractors?

[AtW]

Are there many contractors here who pay an effective rate of 40%?

No idea, from my point of view Ltd can only help reduce NICs via dividends.