Reply to: What to do if you are currently with a Composite or Managed Company.

[Ardesco]

I wish the Gov would get smart. The average contractor might have revenue of say £60k, and hence pay about £15k tax. If he is forced to go permie, he will prob earn, say £40k, and pay about £11k tax.

Am I being stoopid here? i.e. does the Gov want less tax by forcing us all to become permies?!

Then again, I've always said that only the thickest and least educated people work for government, hence that explains their thinking...

One other thing to remember is that this government thinks that evrybody should be in a permie job. I remember just before the last election listening to some liebour MP ranting on the radio about one man band LTD Co's and how they were abusing the tax system and they should all be shut down and forced to pay lots of extra tax. I remember thinking at the time, you muppet we all have a paper trail for every bit of money going into our company so we can't be dodgy (or if we are it is very easy to catch us). Go look at plumbers, builders and gas installer who work cash in hand and invariably have thier company name as thier name (e.g. joe bloggs plumbing). Very easy for them to get a cheque made payable to joe blos and put it in personal account raher than co account, or just take cash and only declare half of it, they rarely give out recepits.

[freshblue]

So come April 07 everyone will have to decide between your type of offering and the chance of not having these expenses or a ltd company which defo allows them plus the possibility of divvies if outside of IR35. I really can't see why anyone would choose the first option.

I think she is saying that Parasol will continue to allow expense claims as they are not part of the PBR. That is how I read the email I got from them.

[Xtrain]

We (Parasol) on the other hand are saying we will be able to allow genuine business expenses. We (and ContractorUmbrella) have never sold our service based on "no receipts" needed and "claim what you like".

Our view is not based on simple hoping, Parasol has a specific business model that beneath the bonnet is quite different to other PAYE operators.

Happy Christmas!

I think the crux is that the PBR is not trying to get at "genuine business expenses" but imho they will not allow travel to work and therefore subsistence to your employees normal place of work (i.e. the end client site).

So come April 07 everyone will have to decide between your type of offering and the chance of not having these expenses or a ltd company which defo allows them plus the possibility of divvies if outside of IR35. I really can't see why anyone would choose the first option.

I have used both Parasol and OrangeGenie in the past and tbh honest you both were the same. I was employed by both and you both deducted (extremly large) paye and ni payments from me. The expenses policies are similar and my net return in % terms was virtually the same and this is SIGNIFICANTLY less than what I get currently with my own ltd. So imo under the bonnet you are exactly the same as all other PAYE brollies with the exception you've got a massive debt due to your MBO!!!

[tim123]

ContractorUmbrella and Parasol have always operated very ethical expense policies. I believe SJD for instance are seemingly saying that come April 07 their own ContractorUmbrella will not be allowing expense claims based on the draft legislation. They are therefore keen to promote a switch to Ltd and that is fine, we are simply offering a considered alternative.

We (Parasol) on the other hand are saying we will be able to allow genuine business expenses. We (and ContractorUmbrella) have never sold our service based on "no receipts" needed and "claim what you like".

Our view is not based on simple hoping, Parasol has a specific business model that beneath the bonnet is quite different to other PAYE operators.

Happy Christmas!

I think that this is wishful thinking.

Happy New year.

tim

[Parasol_Service]

I do however appreciate your brave stance, and after a £25 million pound management buyout a few months ago, it has to be a brave stance. The statement from the revenue is absolutely clear, you are doomed!!

Just go limited, you know it makes sense

Merry Christmas

Newby

That is your opinion Newby and you are entitled to it. Our opinion is different of course and based on solid evidence and detailed understanding. An MBO would not have been completed if we did not have a heads up on what was coming around the corner. We don't operate at local HMRC level and whilst Ltd company is a good option for many, there are plenty of people who like the hassle free and inclusive approach we provide. That's at the basic level but we believe no one else offers nor provides the range of support, benefits and development that Parasol does to contractors. Of course tax and net return are important but there are many people who equally enjoy professional employment benefits.


Each to his/her own.

[Parasol_Service]

Am I correct in saying that Parasol do allow travel to work and subsistence claims whilst ContractorUmbrella don't. Is that the difference?

In my eyes there is absolutely no difference between P4 and the Parasol's of this world as they have all allowed travel to work and subsistence whilst it is plainly obvious that the place of work is not temporary. e.g. if you contract via a brolly you don't work at home, you don't work at the brolly HQ so therefore you work at your permanent workplace (the client site). If you then travel to other client sites for work purposes then you can claim that but otherwise you can't. With a PSC your workplace is your home so you can claim it. Seems simple to me but obviously it is in the brolly's interest to make you think otherwise.

ContractorUmbrella and Parasol have always operated very ethical expense policies. I believe SJD for instance are seemingly saying that come April 07 their own ContractorUmbrella will not be allowing expense claims based on the draft legislation. They are therefore keen to promote a switch to Ltd and that is fine, we are simply offering a considered alternative.

We (Parasol) on the other hand are saying we will be able to allow genuine business expenses. We (and ContractorUmbrella) have never sold our service based on "no receipts" needed and "claim what you like".

Our view is not based on simple hoping, Parasol has a specific business model that beneath the bonnet is quite different to other PAYE operators.

Happy Christmas!

[Parasol_Service]

If the detail has been excluded how do you know they are struggling to make the definition stick and how do you know what can and can't be claimed?

So, can you therefore confirm whether Parasol employees can or can't claim travel to work expenses and subsistence from April 07 onwards. Yes or no would suffice!

Yes

[Newby]

It is just too much to take

Someone once told me to learn from my mistakes... maybe that should be your new years resolution!!!!

"The draft legislation has purposefully exlcuded the detail in realtion to expenses. HMRC will (and are) be stuggling to make the definition stick with the expense issue"

lets hope no one misspells your company name parasol.... parasite!!!!!

I do however appreciate your brave stance, and after a £25 million pound management buyout a few months ago, it has to be a brave stance. The statement from the revenue is absolutely clear, you are doomed!!

Just go limited, you know it makes sense

Merry Christmas

Newby

[peanuts]

Revenue says legislation will not affect umbrellas

I recently sent a consultation email to the revenue regarding the proposed legislation complaining that all that will happen is that contractors will leave umbrellas and open a Ltd company in order to continue to claim expenses under the 24 month rule surprisingly I got the following reply:

' Thank you for your message. We do not believe that umbrella companies are caught by the draft legislation in the consultation document. Our intention is only to capture Managed Service Companies, by which we mean Composites and Managed Personal Service Companies, with the measures described in the document. However, if you do think that business structures other than MSCs are caught by the definition we would be very interested to hear the details. '

[Xtrain]

The draft legislation has purposefully exlcuded the detail in realtion to expenses. HMRC will (and are) be stuggling to make the definition stick with the expense issue. Not allowing someone to claim expenses could be construed as restraint of trade and whilst we welcome a level playing field, does anyone really think that P4 and others will simply stop allowing them come Apr 07? I should add that our principle regarding expenses is not based on a similar strategy e.g. ignoring it.

If the detail has been excluded how do you know they are struggling to make the definition stick and how do you know what can and can't be claimed?

So, can you therefore confirm whether Parasol employees can or can't claim travel to work expenses and subsistence from April 07 onwards. Yes or no would suffice!

[Xtrain]

Am I correct in saying that Parasol do allow travel to work and subsistence claims whilst ContractorUmbrella don't. Is that the difference?

In my eyes there is absolutely no difference between P4 and the Parasol's of this world as they have all allowed travel to work and subsistence whilst it is plainly obvious that the place of work is not temporary. e.g. if you contract via a brolly you don't work at home, you don't work at the brolly HQ so therefore you work at your permanent workplace (the client site). If you then travel to other client sites for work purposes then you can claim that but otherwise you can't. With a PSC your workplace is your home so you can claim it. Seems simple to me but obviously it is in the brolly's interest to make you think otherwise.

[Parasol_Service]

Its a shame that your spelling isn't "compliant", unless your job really is Serice Delivery and not Service Delivery. No wonder you still think that parasol "employees" will still be able to claim subsistence and travel expenses when no other employee can!

Lesley Sweetman
"Service" Delivery & Compliance Manager

Newby - thanks for the comments.

The draft legislation has purposefully excluded the detail in relation to expenses. HMRC will (and are) be struggling to make the definition stick with the expense issue. Not allowing someone to claim expenses could be construed as restraint of trade and whilst we welcome a level playing field, does anyone really think that P4 and others will simply stop allowing them come Apr 07? I should add that our principle regarding expenses is not based on a similar strategy e.g. ignoring it.

Simon, no axe to grind with ContractorUmbrella - let us see what April 07 brings.

[Newby]

Its a shame that your spelling isn't "compliant", unless your job really is Serice Delivery and not Service Delivery. No wonder you still think that parasol "employees" will still be able to claim subsistence and travel expenses when no other employee can!

Lesley Sweetman
"Serice" Delivery & Compliance Manager

[simondolan]

Thought it was high time we responded to some of the stuff being posted and this seemed like a good quote.

1. "Umbrellas" that fit the MSC definition will have problems with expenses (as per the draft legislation) - Expenses will be allowed on specific models but the days of P4 and the rest selling via expenses are limited. Parasol whilst being viewed as a PAYE Umbrella is about as far away as you can get from the MSC definition and not like ContractorUmbrella (as an example) at a detailed level.


Will be an interesting few months ahead!

Lesley Sweetman
Serice Delivery & Compliance Manager

Interesting. What then do you perceive the difference to be between Parasol and for eg Contractor Umbrella?

[Parasol_Service]

So I have this right in my mind.

1. Umbrella's - They are going to turn into payroll companies (no expenses no point using them!)
2. If you are outside of IR35 then set up your own, and get a good accountant.
3. Composites and Managed Limited Companies, are in a world of trouble and are effectively shut down as of the 6th April.

In regard to the latter, are they just going to lie down and take it? I doubt it. Won't they just turn into accountants?

Thought it was high time we responded to some of the stuff being posted and this seemed like a good quote.

1. "Umbrellas" that fit the MSC definition will have problems with expenses (as per the draft legislation) - Expenses will be allowed on specific models but the days of P4 and the rest selling via expenses are limited. Parasol whilst being viewed as a PAYE Umbrella is about as far away as you can get from the MSC definition and not like ContractorUmbrella (as an example) at a detailed level.

2. Or if you don't want the hassle, a professional employment service like ours will allow you to operate with sensible returns.

3. Agreed - Composites are dead but I know for a fact that many are preparing to reconstitute as PSC variants. The Limited Co operators are going to have a lot of competition very soon!

The good will always rise to the top and we have had a tough few years competing with "composites", "IR35 insurance schemes" and other variants.

We are excited about a possible "level playing field" but it will be naive to imagine MSC operators will simply lie down and die. MSC's and others are too used to sitting on bank interest from all the Corp Tax payments they hold, flat rate VAT schemes and charges on expenses.

Will be an interesting few months ahead!

Lesley Sweetman
Service Delivery & Compliance Manager