Reply to: Agency PSLs? (Yes agency, not client.)

[Bluebird]

I assume you're a barrister specialising in UK taxation then, with an equally valid yet differing opinion based upon my non-legally minded half-arsed interpretation and communication of the facts then? Or, did you forget your "IANAL but" prefix?



Well, since I've already said that it is not income in legal terms, and therefore not liable for income related taxes, I'm not sure where the Self Assessment part comes in. As for the form of the payments what does it matter? The point is they are legally classified as non income. Does it matter if it is a loan that does not have to be paid back, loans in a hyper-inflating currency repayed at a later date, payments into a trust located in a place with dual taxation treaty terms with UK, or Land rights for diamond mines on Mars? The point is someone who knows their shiznit regarding this stuff, says it is, in their highly qualified opinion, completely legal, and that is good enough for me.



Of course they don't indemnify me if they did, under the rules defining Managed Service Companies that would make them an MSC, and I'd be taxed up to the eyeballs.

So (SHOCK HORROR) yes I either take an educated risk or receive none of the benefits.

With reference to recent commentary on this thread and the earlier libellous and vexatious comments of a few weeks back:

I find it odd that there is so much sarcasm, innuendo and general sniping on this subject, I fail to see why anyone would not attempt to legally minimise their tax deductions.

This is no different from investment bankers minimising the tax they pay on their bonuses, or the ultra rich using all kinds of accountancy dodges to move money around to avoid taxes, all that is differing is scale of the cash involved.

At no point here, am I advocating that illegal tax evasion is acceptable, quite the opposite, I advocate and participate in what I am advised is legitimate tax avoidance.

Conclusion: I take the advice of qualified professionals in the subject areas where I am out of my depth (much like my own clients don’t make huge technical decisions based upon what they read in the margins of second hand books, they come to me, their authority on the subject). The net result is a positive financial outcome for me.

You, on the other hand, can do what you want to do; it is for you to decide what forms and levels of risk you are prepared to accept, and what levels of time and effort you are prepared to put into running a business, in return for the outcomes you want to receive. And the best bit is I'm happy for you to do that.

I wasn't having a go, only trying to help.
I don't want to see anybody get in a mess.

Take the advice or leave it.

[Chrisos]

Which Umbrellas are on the PSL and who's your agency Chrisos?

Cheers
R

Umbrollies: Think big (boring) ones: Giant, Parasol, JSA, etc...

Current agency: Given the current delicate state of negotiations, I'll not answer that question just now...

[Rialto99]

Morning all,

I've just had a strange thing happen, my agency has just sent me an email announcing that they have a preferred supplier list of umbrella companies.

And, since my umbrella company is not on the list, at my next renewal, I get to either:

1. Change umbrella company,
2. start my own limited company (oh good grief, not again!), or,
3. not renew.

The eight companies they have listed on their PSL, are all large well known names in the world of accounting for contractors, but frankly as far as I can see they seem to be good at making money for themselves rather than contractors, never actually innovating new ways of doing things in the contractor's favour.

Since when did agencies get to dictate how my income is processed? I went though this nearly two decades ago*. If the agency hand off the funds to another limited company, surely that limited company is liable for unpaid taxes? Am I missing something here?

I have just been on the phone, and was informed that several ATSCO agencies are doing the same thing, on the advice of KPMG.

Anyway, the end result is that I have let them know that I will not be renewing the contract if they are going to change terms and conditions unilaterally in this regard. I am expecting a call from someone higher up the management chain.

Has anyone else met this? And if so how do you plan on dealing with it?

I shall keep you informed of progress.

-----------------------------------------------

* I seem to remember a single contractor didn't pay his tax when he was self-employed on schedule D. The revenue came after the agency for unpaid taxes. After that, all contractors had to have a limited company, in order for the agencies to have no liability in the event of non-payment of taxes by a contractor.

Which Umbrellas are on the PSL and who's your agency Chrisos?

Cheers
R

[TheFaQQer]

Given that the scheme seems to be contentious to say the least (and I'm not getting into an argument about whether it is legal / dodgy or not), I find it little wonder that the agency does not want to put them on their PSL.

If there is any chance that it might not be legal, then there could be a chance that the agency leaves themselves open to some kind of claim from HMRC (the same reason they won't deal with self-employed, as they could become liable for your tax bill). I think the agency is playing ultra-safe here, and would be surprised if the client didn't take the same line.

Sounds like you need to be looking for a new role somewhere else. The best of luck with whatever you decide / need to do.

[NotAllThere]

...So (SHOCK HORROR) yes I either take an educated risk or receive none of the benefits...I take the advice of qualified professionals in the subject areas where I am out of my depth

Well, which is it? An educated risk or an area where you are out of your depth? Is your "education" in these matters solely from the people who are selling your the product. Some might think that the people from whom you are taking advice have a conflict of interest, seeing as they make their money directly from you following their advice. It's hardly impartial, is it?

I don't think anyone is accusing you of deliberately setting out to evade tax. But we are suggesting that perhaps you're being a little foolish. Personally, I'd not get involved in any avoidance scheme unless I was sure that I understood precisely what the risks and benefits were. Maybe you do understand, but your postings here indicate otherwise.

[Chrisos]

Sounds like an MSCP to me.

I assume you're a barrister specialising in UK taxation then, with an equally valid yet differing opinion based upon my non-legally minded half-arsed interpretation and communication of the facts then? Or, did you forget your "IANAL but" prefix?

If you have income that is not paid via PAYE, then at some point you have to decalre it to HMRC [ Self Asseesment ] - would you like to divulge what form these payments arrive in your bank account [ please don't say anything like "it's a loan that I don't have to pay back".

Well, since I've already said that it is not income in legal terms, and therefore not liable for income related taxes, I'm not sure where the Self Assessment part comes in. As for the form of the payments what does it matter? The point is they are legally classified as non income. Does it matter if it is a loan that does not have to be paid back, loans in a hyper-inflating currency repayed at a later date, payments into a trust located in a place with dual taxation treaty terms with UK, or Land rights for diamond mines on Mars? The point is someone who knows their shiznit regarding this stuff, says it is, in their highly qualified opinion, completely legal, and that is good enough for me.

And they indemnify you against the risk of investigation and subsequent large tax bills as well, do they? Or is it just you who takes the risk, and they take the fee?

Of course they don't indemnify me if they did, under the rules defining Managed Service Companies that would make them an MSC, and I'd be taxed up to the eyeballs.

So (SHOCK HORROR) yes I either take an educated risk or receive none of the benefits.

With reference to recent commentary on this thread and the earlier libellous and vexatious comments of a few weeks back:

I find it odd that there is so much sarcasm, innuendo and general sniping on this subject, I fail to see why anyone would not attempt to legally minimise their tax deductions.

This is no different from investment bankers minimising the tax they pay on their bonuses, or the ultra rich using all kinds of accountancy dodges to move money around to avoid taxes, all that is differing is scale of the cash involved.

At no point here, am I advocating that illegal tax evasion is acceptable, quite the opposite, I advocate and participate in what I am advised is legitimate tax avoidance.

Conclusion: I take the advice of qualified professionals in the subject areas where I am out of my depth (much like my own clients don’t make huge technical decisions based upon what they read in the margins of second hand books, they come to me, their authority on the subject). The net result is a positive financial outcome for me.

You, on the other hand, can do what you want to do; it is for you to decide what forms and levels of risk you are prepared to accept, and what levels of time and effort you are prepared to put into running a business, in return for the outcomes you want to receive. And the best bit is I'm happy for you to do that.

[NotAllThere]

Yes, it uses very clever people called "tax barristers" to "minimise" tax payments I have to make, using "law", "legal precedent" and other "amazing wheezes".

And they indemnify you against the risk of investigation and subsequent large tax bills as well, do they? Or is it just you who takes the risk, and they take the fee?

[Bluebird]

Well for values of better not including cash percentages, there is the better where I don't have to deal with numbers and accountants and tax people, I just get taxed at source like a regular employee. Which I like lots.

For values of better, that includes percentages of cash, they use a strategy, that causes some of the income the company receives for my services to be classified as something other than personal income to me, and since the money is not personal income, income tax and NI are not due on that component of the corporate income when it lands in my bank accounts.

Hence I pay "normal" tax on my "normal" income, (my normal income being about the same as a permie in the same job), and on the rest, I pay a much reduced amount of tax.

Similar to a limited company, paying dividends and thus avoiding paying national insurance, all quite legal and above board. (Well, prior to IR35 and its extra complications, but lets not go there...)

Suffice to say, perfectly legal, and financially beneficial.

If you want more detail than that, I'll introduce you to them.

Sounds like an MSCP to me.

If you have income that is not paid via PAYE, then at some point you have to decalre it to HMRC [ Self Asseesment ] - would you like to divulge what form these payments arrive in your bank account [ please don't say anything like "it's a loan that I don't have to pay back".

[Chrisos]

Well for values of better not including cash percentages, there is the better where I don't have to deal with numbers and accountants and tax people, I just get taxed at source like a regular employee. Which I like lots.

For values of better, that includes percentages of cash, they use a strategy, that causes some of the income the company receives for my services to be classified as something other than personal income to me, and since the money is not personal income, income tax and NI are not due on that component of the corporate income when it lands in my bank accounts.

Hence I pay "normal" tax on my "normal" income, (my normal income being about the same as a permie in the same job), and on the rest, I pay a much reduced amount of tax.

Similar to a limited company, paying dividends and thus avoiding paying national insurance, all quite legal and above board. (Well, prior to IR35 and its extra complications, but lets not go there...)

Suffice to say, perfectly legal, and financially beneficial.

If you want more detail than that, I'll introduce you to them.

[TheFaQQer]

So how is it better* than running your own Ltd? I can't see how it could be.

*more tax efficient

Offshore scheme?

[Pondlife]

Yes, it uses very clever people called "tax barristers" to "minimise" tax payments I have to make, using "law", "legal precedent" and other "amazing wheezes".

Snip...

So how is it better* than running your own Ltd? I can't see how it could be.

*more tax efficient

[Chrisos]

Because he's using an umbrella company that has some amazing wheeze, that's completely legit, that allows him to take home more money that if he were ltd.

Yes, it uses very clever people called "tax barristers" to "minimise" tax payments I have to make, using "law", "legal precedent" and other "amazing wheezes".

Can I sense the word "dispensation" looming here?

Possibly from the agency with regard to how they are going to progress, but if you are thinking in terms of dispensations from the tax authorities with regard to undocumented expenses for the sake of simplified accounting, then certainly not from my umbrolly. I consider claiming fictitious expenses to be somewhat fraudulent, and I’m pretty sure those chaps at HMRC do too...

[miffy]

Can I sense the word "dispensation" looming here?

Oh yes!

I just love that word. Makes me smile every time I hear it.

[TheFaQQer]

Because he's using an umbrella company that has some amazing wheeze, that's completely legit, that allows him to take home more money that if he were ltd.

Can I sense the word "dispensation" looming here?

[NotAllThere]

Chrisos,

Haven't ploughed through the whole thread but why do you view operating through your own Ltd as taking a pay cut?

Because he's using an umbrella company that has some amazing wheeze, that's completely legit, that allows him to take home more money that if he were ltd.