Reply to: Anyone thru Payscheme that's been investigated?

[MobileCheese]

Hi

I got this from Payscheme Plus in response to this thread, any thoughts?

The loan structure simply utilises a loophole in the tax system so currently it is a valid way of getting paid and will remain so until such time that HMRC chose to look into this loophole and close it down. We have been in business 11 years and this particular structure in our group of companies has been operating for 7 of those years so I can assure you we would not disappear over night. Your contract of employment with us would be a standard legal document as in place with all other umbrella company service providers.

Your payments would not be erratic – as long as you are working and submitting timesheets to us we would be invoicing on your behalf and making payments to you in accordance with your agency/client payroll frequency. Payments would not be uneven as your fixed PAYE salary would be constant throughout all of your payments, the only way the “loan” element may fluctuate is if your days or hours worked vary. As for regularly running into the red this would not be due to the structure we provide – we pay all received monies from your agency out straight away into your account, no payments are withheld by us.

We have tax liability insurance in place which you would be covered under as well as an indemnity document (which I can provide to you) stating that you would not be asked to repay any monies in the event of the company going bust.

Dont do it, I know 3 other people who have used simular schemes and all ended up with £80k plus tax bills and the stress of a 2 year investigation

[radapple]

Hi

I got this from Payscheme Plus in response to this thread, any thoughts?

The loan structure simply utilises a loophole in the tax system so currently it is a valid way of getting paid and will remain so until such time that HMRC chose to look into this loophole and close it down. We have been in business 11 years and this particular structure in our group of companies has been operating for 7 of those years so I can assure you we would not disappear over night. Your contract of employment with us would be a standard legal document as in place with all other umbrella company service providers.

Your payments would not be erratic – as long as you are working and submitting timesheets to us we would be invoicing on your behalf and making payments to you in accordance with your agency/client payroll frequency. Payments would not be uneven as your fixed PAYE salary would be constant throughout all of your payments, the only way the “loan” element may fluctuate is if your days or hours worked vary. As for regularly running into the red this would not be due to the structure we provide – we pay all received monies from your agency out straight away into your account, no payments are withheld by us.

We have tax liability insurance in place which you would be covered under as well as an indemnity document (which I can provide to you) stating that you would not be asked to repay any monies in the event of the company going bust.

[malvolio]

Philanthropy is a wonderful thing...

Is it worth pointing out that you can get damned close to 77% return using a conventional UK-based Ltd Co with no question of high-risk strategic investments? Thought not...

[Old Greg]

I was considering trying these and have recieved the following. They show 77% as return. I'll try and get more info.

And you joined the board just to post us that!

[jimmyjoggers]

I was considering trying these and have recieved the following. They show 77% as return. I'll try and get more info.

Thanks for your interest in our payroll solution - Payscheme Plus.

The Futurelink Group, established 12 years ago, has a variety of payroll structures to assure you keep the most of your hard earned money. Payscheme Plus is the most suitable product for people making over ~37k pa. The structure circumvents the whole issue of IR35 as you would be 'employed'' ...versus the Self Employment option where you would have to comply with IR35 etc. You would be employed by us on a commercial salary and given a discretionary (TAX FREE) loan (not the typical dividend payment given by composite companies where 19% corporation tax applies). You simply pay a 5% management fee that includes any interest charges for the loan.

How Payscheme Plus works
Part of your income is fully taxed. A base salary is agreed upfront before you start which is normally in excess of the National Minimum Wage. The rest of your income (loan element) is tax free. We secure the validity of the loan in several ways; you pay 1% above the Bank of England base rate, you are given an official loan offer letter you are issued with monthly loan statements. The loan offer is typically fixed in ~30k increments which are drawn against every time you are paid. When the total of loan payments nears to ~30k, a new loan offer is issued. Even though the interest rate is currently at 6.25% (1% above base), we actually offset this within our 5% management fees...so you only pay 5% across the board. We have no set up or cancellation fees, and there are no binding contracts in respect of how long you use us.

You wouldn't need to bother about offsetting your expenses as most of your salary is tax free to start with. The other advantage with Payscheme Plus is that we sort out all your tax and NI for you up front, so you won't get any surprise tax bills later on. If asked to file your taxes by the Revenue, you would simply declare earnings on the low base salary, also featured on the P60 we issue each year.

I've enclosed an example spreadsheet to illustrate approx what you can expect to retain whilst using us (please note that we have other examples available - please let me know if you would like one based on your own contract details). When you look down at the deductions, please bear in mind that you would receive the interest amount in full, so your actual take home would be higher. The illustration is for the benefit of the revenue as we have to show you paying interest on the loan.

[malvolio]

Asusming the plan is to work and live i the UK, get your own limited comany and work the same rules as everyone else. You won't lose that much net income and can sleep at night.

You might like to put some spare thousands into a long-term savings account just in case though...

[ermintrude]

Simon Dolan answered the question, very clearly. When the loan is written off, you are liable for the equivalent taxation due on it as personal income. If you pay the loan back, of course, no tax due - but you won't have any money either.

Stop thinking about it and walk away.

I've been with them for two years - and, mainly due to a combination of naivety and greed, have blithely disregarded the consideration that the scheme had its faults.

That being said, this is the first time I have seen the flaw in the scheme couched explicitly.

Out of interest, and in no way would I consider your response to be anything but opinion, what would my best course of action be from here on? (I have an appointment with a CTA next week in any case - the blithe disregard has disappeared, to be replaced with niggling concern.)

[Liability]

I see!

Thanks! I thought this was too good to be true!!!!

[malvolio]

Simon Dolan answered the question, very clearly. When the loan is written off, you are liable for the equivalent taxation due on it as personal income. If you pay the loan back, of course, no tax due - but you won't have any money either.

Stop thinking about it and walk away.

[Liability]

True

Im just concerend about the Loan and write off! To me, it sounds logical that if they go bust we would be potentially liable to pay back!

Also, what if some one decides to call the loans back in?....Where does the contactor go then!

Just sounds a little odd...but by no means impossible!

I know of alot of high flying high paid execs who invoice et al through complex schemes to take home large amounts at leading Investment banks...

I just wanted to see where we stand on the loan type!

Does anyone know of the companise history? ie there not gna shut up shop and run with cash! etc?

[danthomas25]

Guys
So what is the cue?
Are they legit and honourable or waste of space?
I am thinking of swtiching and P+ was one option! But reading these thread, Im VERY concerned!

Well, there doesn't seem to be anyone who's been investigated... that looks at this BB anyway but there is the Dignatio tale of warning (see the thread "PayScheme+ - can someone spell it out pls?" for a link) as indicated above.

If you're concerned but still considering them, phone them and ask them to address your concerns. You can always post responses back here and see what folk have to say about the responses.

[Liability]

Guys

So what is the cue?

Are they legit and honourable or waste of space?

I am thinking of swtiching and P+ was one option! But reading these thread, Im VERY concerned!

[danthomas25]

In which case, if Payscheme ever go bust, the receivers are going to come knocking on your door since you will still owe them the money...

It is a concern I suppose.
They do issue an notice of absolution with relation to the outstanding loan, but whether this is worth the paper it's printed on is a legal matter I guess. Any thoughts folks?

[ChimpMaster]

In which case, if Payscheme ever go bust, the receivers are going to come knocking on your door since you will still owe them the money...

I would imagine that the loan is paid via a trust, which I presume is not in any way responsible for the actions of the company. Hence if Payscheme or [insert any other such Co name] goes bust then the receivers can't actually retrieve money from the trust or contractors.

Just my view/guess - I won't pretend to know how these things work.

[Cowboy Bob]

PS: the loan doesn't get written off.

In which case, if Payscheme ever go bust, the receivers are going to come knocking on your door since you will still owe them the money...