2019 tax charge - consultation preparation

[SomeDude]

I think many people moved from Ltds to schemes strictly because of greed.

Difference in take-home amount between scheme user and well-managed LTD is maybe few percent.

[Old Greg]

There is indeed no crime at the moment to use tax avoidance schemes.

I'd pick Ltd over umbrella because there is a lot more control over when one gets paid - business can and should accumulate some profits to ensure smooth salary payments for employees, that's important for mortgage reasons, also Ltd is much more suitable for Plan B.

Indeed, I use Ltd for that very reason, even though in my situation it confers no (or absolutely minimal) tax advantage over a brolly. It's a genuine business structure.

[DotasScandal]

Unfortunately I fell for the "they issue the scheme number so they can understand how it works and change the law to prevent it working in the future" line, like a ******* idiot

Or simply like someone who thought that they were dealing with a non-corrupt authority in a non-failed State. There is a term for HMRC's modus operandi: "abuse of trust".

[Old Greg]

Difference in take-home amount between scheme user and well-managed LTD is maybe few percent.

How few?

[ASB]

I reckon Ltd contractors now (with new higher tax on dividends) will be making more money to Govt than if they all became PAYE permies - being a contractor allows to command higher rate, plus many would take less holidays, less sick days etc.

I doubt it. Obviously you are looking at an outside IR35 case so I will focus on that but:-

- There is no suggestion that they will necessarily distribute all. Though if not it is only deferment really. May use other deferment vehicles like pension though.
- The marginal take is still lower. Not as much but still meaningfully so. I posted up an example if you are bothered/interested enough to have a look
- The higher rate is at the expense of money going to different places. Thus client is saving on CT over payroll costs which reduce government take in two ways. Business is then paying CT some payroll costs and new NI tax.

It won't be such a big gap, but there is still going to be a gap (though yes less holidays etc may cause an effective increase in productivity which will compensate). I suspect that they feel they have got the gap "near enough for the time being". With plenty of scope to tinker later....

[Old Greg]

Well, of course many independent parties would say "it's all legal, nothing to worry about", as until now nobody has proven that it was in fact illegal... And nobody could have known about retrospective APN laws coming to life years in the future.

Then why did so many scheme users live in a state of semi-perpetual stress for so many years? That was my experience of colleagues whose arrangements I knew about. Or perhaps, in retrospect, it was shame.

[AtW]

Difference in take-home amount between scheme user and well-managed LTD is maybe few percent.

3.5% tax, plus I reckon 10% fee to scheme maker, so 13.5% vs 40%, nearly 3 times less.

Source: BBC News - Offshore tax avoiders face £100m tax bill

If the difference wasn't big then nobody would touch those schemes.

[Old Greg]

3.5% tax, plus I reckon 10% fee to scheme maker, so 13.5% vs 40%, nearly 3 times less.

Source: BBC News - Offshore tax avoiders face £100m tax bill

If the difference wasn't big then nobody would touch those schemes.

The dirty spekulant using Ltd outside IR35 would be retaining significantly >60%. Perhaps 70 - 75% IIRC.

[DotasScandal]

Then why did so many scheme users live in a state of semi-perpetual stress for so many years? That was my experience of colleagues whose arrangements I knew about. Or perhaps, in retrospect, it was shame.

We have a very different experiences, then.

99% of "scheme users" we know were living completely stress-free precisely because of the perceived certainty that they believed the "schemes" provided (reinforced by the fact that it was all fully declared - DOTAS registered!!!!)

Of course, a completely wrong perception in retrospect (but in retrospect, everything looks so crystal clear, eh?)

99% of these 99% would have dropped off their "schemes" at once had HMRC produced one of these cutesy "tempeted by tax avoidance?" leafleats that they are sending to everyone and their dog these days.

For HMRC to say that they needed retrospective legislation to displace stubborn contractors from schemes is therefore a major fallacy. The reality is that they needed it to cover-up 10 years of guilty inaction and incompetence. By murdering 65 000 inconvenient witnesses.

[Old Greg]

We have a very different experiences, then.

99% of "scheme users" we know were living completely stress-free precisely because of the perceived certainty that they believed the "schemes" provided (reinforced by the fact that it was all fully declared - DOTAS registered!!!!)

Of course, a completely wrong perception in retrospect (but in retrospect, everything looks so crystal clear, eh?)

99% of these 99% would have dropped off their "schemes" at once had HMRC produced one of these cutesy "tempeted by tax avoidance?" leafleats that they are sending to everyone and their dog these days.

For HMRC to say that they needed retrospective legislation to displace stubborn contractors from schemes is therefore a major fallacy. The reality is that they needed it to cover-up 10 years of guilty inaction and incompetence. By murdering 65 000 inconvenient witnesses.

Plenty of people could smell something "too good to be true" 10 years ago. http://forums.contractoruk.com/busin...-86-gross.html

Anyway, I've probably derailed your thread enough now so I'll let you get onto it. But don't be mean to AtW - he's only little.