AM Limited COP8 HMRC Investigation Letter..

[Wanderer]

As for the comments about legalities....well hypocrisy is indeed at play...LTD company imo is just another tax avoidance. Why pretend otherwise because people who use them are doing so for what reasons? lol
To think somehow one arrangement is deemed more appropriate than another is subjective...

Lots of people trade through Limited companies, including a large number of MPs. The way the law stands, it's one of the only ways many of us can trade because no one will take us on as self employed. The trading structure is quite openly discussed on HMRC's website. The government accepts that we trade in this manner and they have done for years.

I don't think you can say really compare it to some highly secretive off shore tax avoidance scheme that you sign up to under non disclosure agreement and pay virtually no tax on a 6 figure income while the scheme provider creams off a huge margin...

[LisaContractorUmbrella]

Two first time posters?

So what...some of us are in similar situations, so dont jump to assumptions, tut tut.

As for the comments about legalities....well hypocrisy is indeed at play...LTD company imo is just another tax avoidance. Why pretend otherwise because people who use them are doing so for what reasons? lol
To think somehow one arrangement is deemed more appropriate than another is subjective...

Stones and Glasshouses comes to mind....otherwise everyone would be paying same tax as PAYE.

There is a big difference between drawing dividends from a Ltd Company which is accepted tax practise and using a completely artificial offshore, loan, trust, forex or goodness knows whatever else scheme which was contrived for no other purpose than to avoid tax

[LandRover]

There is a big difference between drawing dividends from a Ltd Company which is accepted tax practise and using a completely artificial offshore, loan, trust, forex or goodness knows whatever else scheme which was contrived for no other purpose than to avoid tax

Is there really?

So why was IR35 legislation created?

Please stop preaching hypocrisy...people went LTD to pay dividends to avoid tax...otherwise they would use umbrella and pay PAYE.

[cojak]

Is there really?

So why was IR35 legislation created?

Please stop preaching hypocrisy...people went LTD to pay dividends to avoid tax...otherwise they would use umbrella and pay PAYE.

I went Ltd because I can't work as a Sole Trader. I don't have an Umbrella because they are an artificial construct (my employer??? Give me a break...) who have control of my money and may well p1ss it up the wall without much recourse by me.

If I need to be inside IR35 I will do so from my LTD. You do NOT have to use an Umbrella to work within IR35.

[malvolio]

Is there really?

So why was IR35 legislation created?

Please stop preaching hypocrisy...people went LTD to pay dividends to avoid tax...otherwise they would use umbrella and pay PAYE.

12 years on and still we see comments like this....

IR35 was enacted because Civil Servants at the Treasury don't understand how a freelance business works and how it's affected by S134c as was (S44-47 ITEPA 2003 nowadays). All they saw was people sat at desks using limited companies so they must be doing it to avoid tax so let's find a way to tax them as employees. Add to that an ill-informed bandwagon-jumping prat of an MP in a job she was unqualified to do and you get IR35. No thought was given to income levelling or risk management, and you can't simply apply NICs to dividends for a whole host of legal reasons.

If' you've bought the Treasury argument, you're in the wrong job.

[LandRover]

IR35 was the basis for generating a whole industry of Tax Specialists etc etc

It's cost UK plc billions in lost revenue...

If it was repealed then the Tax Specialists would be redundant as many would use LTD company arrangement again.

It was bad legislation that resulted in a huge mess and lost ££££££££

Any politician in the Treasury who had a whiff of sense would get IR35 removed!!!

[LisaContractorUmbrella]

I went Ltd because I can't work as a Sole Trader. I don't have an Umbrella because they are an artificial construct (my employer??? Give me a break...) who have control of my money and may well p1ss it up the wall without much recourse by me.

If I need to be inside IR35 I will do so from my LTD. You do NOT have to use an Umbrella to work within IR35.

No you don't indeed. I would just point out though that no all brolly owners are control freaks and not all of us have any inclination toward p**ing anything up the wall

[DonkeyRhubarb]

IR35 was the basis for generating a whole industry of Tax Specialists etc etc

It's cost UK plc billions in lost revenue...

If it was repealed then the Tax Specialists would be redundant as many would use LTD company arrangement again.

It was bad legislation that resulted in a huge mess and lost ££££££££

Any politician in the Treasury who had a whiff of sense would get IR35 removed!!!

If you read the National Audit Office report on mass marketed tax avoidance, a huge portion of it is contractor related.
Tax avoidance: tackling marketed avoidance schemes - National Audit Office

These schemes did not exist prior to IR35, and there can be no doubt IR35 created the market for them.

[Wanderer]

These schemes did not exist prior to IR35, and there can be no doubt IR35 created the market for them.

Tax avoidance schemes did exist back in the 1990s because I remember them being marketed and people using them but you are right that the advent of IR35 (and the subsequent outlawing of MSCs) seems to have caused a massive proliferation of them...

The funny thing is that a lot of the schemes don't actually offer such high "retention" rates - with a LTD company you can quite legally take home 85% of your contract value. Perhaps people are attracted to the schemes because they are quite simple and running a company is such a pain in the neck.

[DonkeyRhubarb]

The funny thing is that a lot of the schemes don't actually offer such high "retention" rates - with a LTD company you can quite legally take home 85% of your contract value. Perhaps people are attracted to the schemes because they are quite simple and running a company is such a pain in the neck.

You are right the differential isn't that much.

The authorities fixate on the 5% tax people pay but they overlook that 10% goes to the scheme promoters.