Reply to: Montpelier not affected by new tax laws?

[lamboman]

What was different about Steed's arrangements when compared to all of these other "loan" type firms?

Steed didn't offer loans, they used trust funds instead. I don't think Montpelier use loans either, but best to ask them...

[ChimpMaster]

I understand what you say Lewis - I was just talking generally...

Steed closed down because they said their scheme was not compliant with the new legislation which came into affect this April - I know because I was with them.

What was different about Steed's arrangements when compared to all of these other "loan" type firms?

[lamboman]

I understand what you say Lewis - I was just talking generally...

Steed closed down because they said their scheme was not compliant with the new legislation which came into affect this April - I know because I was with them.

[ChimpMaster]

It's interesting to note that there are a number of firms operating "tax avoidance" arrangements, and to be fair to them there haven't been many high profile failures as of yet. Montpelier & PayschemePlus are just 2 of them.

Steed Solutions recently closed down, though I don't know why -- many of the contractors here were using them and now have to find an alternative. Maybe they closed down because HMRC started investigating some of their clients? In that case perhaps the same could happen to Montpelier etc and hence leave the contractors with the so touted £120k tax bill.

Then again, HMRC could just as easily go through Companies House lists and pick out all of the "IT Consulting" firms, and then trawl through the 1-man bands to check them for IR35 status. I'm sure that'd raise a few £120k tax bills.

After all, they're currently targeting buy-to-let investors simply by looking at Land Registry records.

[Lewis]

Lewis, Montpelier state they are not affected by the new laws at all, and no-one has proved otherwise as yet.

Same goes for PaySchemePlus who clearly state on their website that they are not affected by the rules either.

People can say what they want about the above two companies but no-one has proved that anything they are doing is illegal as yet... Go figure!

I wasn't saying they are not valid, I don't know enough about it at all. But I was commenting on the other thread where someone on the scheme claimed they were being investigated and someone else claimed they knew people who got burnt. I was wondering if (a) it is true people are being investigated (2) if there has been any outcome as yet.

[lamboman]

Lewis, Montpelier state they are not affected by the new laws at all, and no-one has proved otherwise as yet.

Same goes for PaySchemePlus who clearly state on their website that they are not affected by the rules either.

People can say what they want about the above two companies but no-one has proved that anything they are doing is illegal as yet... Go figure!

[Lewis]

A collegue was saying he works through a Isle of Man scheme run by DMS and gets 80% take home. He explained about getting loans which all sounded too risky for me personally but I was having a little read about these schemes out of interest anyway. I randomly came accross this thread about Montpelier, and then this one http://forums.contractoruk.com/threa...ontpelier.html

So, has there been any outcome yet for those on the Montpelier scheme being investogated by HMRC? I can't understand why people would take this kind of risk. Am I just being to paranoid and actually they work fine? Or are they bit by bit getting shut down. They seem to have been running for a long time. Just curious...

[Bernard]

Hmmm makes you wonder why Bernard would go through the trouble of setting up a CUK account and replying to a post, but then ignore fundamental questions regarding his company operations.

My reason for setting up an account is to occassionally set the record straight. I do not check the site every day - today I have looked at it again. I will probably look at it again in a few weeks time.

I have mentioned before that I will not use this forum to discuss the merits of our arrangements but I am happy to discuss them with clients or potential clients who want to contact me directly.

We underwrite our arrangements to the extent that we defend any HMRC query raised in connection with the planning. We do not guarantee that the arrangements work but you cannot guarantee any tax planning works.

The transfer of debt provisions take effect in January 2008) for an unconnected agency. I would expect that closer to that time all agencies will look critically at any arrangements they are involved in to ensure that they are not at risk. Montpelier arrangements are no different and we are happy to discuss this with the agencies to ensure that they are happy with any arrangements that we have.

Bernard

[BrilloPad]

I am with montpelier. They have been very good and I am sticking with them. But I know alot of people on here dont like them.

[ChimpMaster]

Hmmm makes you wonder why Bernard would go through the trouble of setting up a CUK account and replying to a post, but then ignore fundamental questions regarding his company operations.

[malvolio]

It was actually a serious question and highly relevant. You don't really think I expected an answer, do you?

[ChimpMaster]

So you're willing to underwrite your client's losses if you're wrong?

Bernard, on a serious note, can you please answer this question. There are many here who would be very interested in hearing your views on this.

[TheFaQQer]

Computer People might

Nope - I spoke to someone there today who said that they wouldn't work with MSCs any more.

[tim123]

. Not sure what their liability would be under MSC rules. Previous tax legislation has always insulated the paying party from any responsibilities if they paid a UK limited company.

Under the new rules they can be chased for the unpaid tax and their liabiliy would initially be whatever HMRC decide it should be.

There isn't just the risk that the agent are actually liable for the tax, there is the much bigger risk that HMRC will decide that they are the easiest fish to catch and chase them first. Fighting HMRC in court over this issue could bankrupt a small agency, even if they never actually become liable for the tax.

Under the new rules, if I were running an agency I would make sure that all of my cons was either: working through his own one man limited or through a recognised brolly. Anything else is far too risky.

Anicdotal evidence suggests that many agencies ARE taking this view.

tim

[IR35 Avoider]

Are any agents really going to let their contractors work through an offshore company that looks like an MSC?

There has always been reason for agencies to avoid paying direct to off-shore companies. An HMRC document I read many years ago indicated that if a chain of payments from client to worker went off-shore, they would recover unpaid NI from the last UK link in the chain.

Offshore entities can have an on-shore subsidiary that passes the money on, so I'm not sure how the agency can tell if a scheme is being used. Not sure what their liability would be under MSC rules. Previous tax legislation has always insulated the paying party from any responsibilities if they paid a UK limited company.