Choice Premier - Foreign Loan Scheme...

[scotty]

Its ok you never offended me in anyway and a few blunt words are the least of my concerns!!......

I did have a look through the threads but couldnt see anything specific about this company which is why i created this thread.
Where I work there are a number of contractors who have been so for years, the majority do the Ltd company thing but some have chosen alternative options similar to the one i have mentioned so just wanted to see if anyone had particular experience with them........thanks everyone though for your advice and guidance.

Cheers!!

[northernladuk]

Thanks for your rather rude advice Malvolio!!!........ ;-)......we cant all know everything like your goodself.

Try the following in google (or our very own search) "foreign loan /site:contractoruk.com"

This link might even work.

Google

<Sniff> <Sniff> I have been replaced .. There is nothing left here for me... Goodbye cruel cruel world...

[ASB]

<Sniff> <Sniff> I have been replaced .. There is nothing left here for me... Goodbye cruel cruel world...

OMG, what have I done. Now I've got your blood on my hands.

[northernladuk]

OMG, what have I done. Now I've got your blood on my hands.

You have!!!!

But some +ve rep will get rid of it I am sure!!

[LisaContractorUmbrella]

85% take home and £1000 referral fees Well, that doesn't sound to good to be true at all does it

[THEPUMA]

In answer to the original question, I don't think the risk/reward on these scheme stacks up. I would love it to, as I have been offered double my standard contractor fee on an ongoing basis if I would be prepared to refer my clients to such a scheme provider. Double the income for no work is obviously an attractive proposition if I could justify it to my clients, but unfortunately I can't.

If you go down this route and take home 85%, I'm guessing that the scheme provider is getting the lion's share of the 15% deduction (happy to be corrected here). Typically, this will be on a non-contingent basis (I would be far more interested in a scheme where you get your money back via a third-party insurer if the scheme fails).

So if the scheme doesn't work, you will probably end up paying far more tax than you could have paid had you set yourself up as a limited company with optimum dividends to you and your spouse (if she is not a higher rate taxpayer). You will also pay interest on this. Hopefully not penalties if adequate disclosure has been made.

Whereas if you set up your own company, depending upon your cashflow requirements and other personal circumstances, it is entirely possible to acheive a take hom percentage north of 80%.

You will probably conservatively make a profit of circa 2.6% using the flat rate scheme. You will also get corporation tax relief on your salary/ies and expenses. Corporation tax is at 20% so if we assume £100K turnover, one salary of £7,068 and expenses of £10,000, your take home after corporation tax BUT BEFORE INCOME TAX, assuming £3K of the £10K expenses are ones that you wouldn't have incurred anyway, would be £82,494 out of a "profit" of £97K ie 85%.

If you are married to a non-earner and neither of you have any income from outside of the company, you could pay yourself all of the post-tax profits in tax-free dividends so no further tax would apply.

This conservatively assumes that you can't justify a salary to your spouse, which would otherwise have increased your take home by a further £1,413 to £83,907 or 86.5% of your profits.

Obviously, not everyone has the luxury of a non-earning spouse. In that case, the position is not quite so compelling but your take home, depending upon cashflow needs would range between £73,353 (75.6%) and £82,494 (85%).

Obviously at higher levels of income, the take-home percentages come down.

In conclusion, it is worth all the grief for a relatively modest saving (or none at all depending upon your circumstances)?

PUMA

[DonkeyRhubarb]

Most scheme providers charge 10%, leaving HMRC with 5%. Needless to say HMRC aren't too happy with their share.

I don't want to get in to the debate about the efficacy/ethics of these types of schemes.

All I will say to anyone who is determined to go ahead is don't put all your eggs in one basket. Switch arrangements from time to time to spread the risk. Perhaps mix in a bit of Ltd as well.

Don't bet the farm on one scheme!

[ASB]

Most scheme providers charge 10%, leaving HMRC with 5%. Needless to say HMRC aren't too happy with their share.

I don't want to get in to the debate about the efficacy/ethics of these types of schemes.

All I will say to anyone who is determined to go ahead is don't put all your eggs in one basket. Switch arrangements from time to time to spread the risk. Perhaps mix in a bit of Ltd as well.

Don't bet the farm on one scheme!

I think switching schemes might actually increase risk.

If you receive an aspect enquiry for scheme 1 then it seems inevitable the scheme 2 will also be investigated and likely challenged.

If somebody else on either scheme 1 or scheme 2 receives an aspect enquiry then this is likely to cause (eventually as part of the challenging) an enquiry on all users of either scheme.

[geoff from contracta IOM]

The reality is there is nothing to connect the users to the self employed schemes apart from the loans to bank accounts so an investigation would have to be raised in order to discover the loan element then leading on to the defence of the scheme. There is nothing to be declared on SA returns as the loans are not income in the same way as a personal loan from Barclays is not income.

[malvolio]

.... There is nothing to be declared on SA returns as the loans are not income in the same way as a personal loan from Barclays is not income.

Hate to disagree with you but you can be taxed on the use of a loan as though it were income. You can only get away with not reporting it on your SAR becuase no UK company has declared it as being issued. That doesn't mean that not declaring it is acceptable; the whole logic of self assessment is that you declare everything then apply the rules. If the loan is truly non-taxable, it won't be taxed, or if it is you can appeal the ruling.