Originally posted by malvolio
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Reply to: Dodgy tax schemes - are they worth it?
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Previously on "Dodgy tax schemes - are they worth it?"
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Originally posted by Dark Black View PostThe definition on P17 of the draft guide http://www.hmrc.gov.uk/sa_drafts/sa150.pdf seems robust though - would we not be on dodgy ground by not answering that question(for a typical one-person ltd)? Or am I missing something....?
Equally there is no legal basis for separating out companies owned by a small number of shareholders - Ford UK, Virgin or BHS are some current examples...
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Originally posted by malvolio View Post...As regards the Service Company question on the SA form, we're still waiting for legal advice but right now there is no such thing legally so you can justifiably answer "no".
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What people tend to forget is that a lot of these schemes using offshore facilities of various flavours don't actually avoid tax, they merely delay you paying it. So come out of the scheme and all of a sudden you have a back-tax bill since all your income is still UK-based...
As regards the Service Company question on the SA form, we're still waiting for legal advice but right now there is no such thing legally so you can justifiably answer "no".
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Just don't pay any tax at all and 7 years later they can't investigate you.
Seriously though, where I work I know a number of contractors who used to be with Steed Solutions. Steed were simply told to cease operating in that capacity, and as far as I know none of the contractors were billed by HMRC for extra tax.
I don't know the details - maybe someone here can recall what happened with Steed?
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I can see the question , not sure what it means though to contractors, whats the definition of a 'service company' ?
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Originally posted by Bumfluff View PostAre they defo including the 'service company" questions in the next tax returns I had seen it mentioned before but thought it had been dropped ???
http://www.hmrc.gov.uk/sa_drafts/pdf-2007-08.htm
I know there's a lot of opposition but hadn't heard that it was to be dropped.
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Originally posted by Chugnut View PostThe 2007/2008 tax return has the new "service company" section and I expect limited companies will soon be firmly in the firing line, citing reasons of "tax motivated incorporation".
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Definitely not worth the risk these days. All schemes need to be registered with the Revenue as part of the 2004 disclosure rules, and they are looking into them.
The Revenue appear to be getting more aggressive towards any type of tax planning/avoidance, and naturally want us all on 100% PAYE with Employer NIC as well too, ta. The 2007/2008 tax return has the new "service company" section and I expect limited companies will soon be firmly in the firing line, citing reasons of "tax motivated incorporation".
At the moment I have no idea how much to pay myself - do I cover my monthly living expenses or not? Accountants say around 6k salary is the minimum, whereas they recommend 10k or above. Clearly the Revenue would prefer otherwise, and they are the ones you are ultimately answerable to.
I wouldn't be surprised if the next rule of thumb the Revenue apply is you must pay yourself "market rate" (that old contentious chestnut), it must cover your monthly outgoings, with any dividends to be paid annually at the end of the financial year - a reward for work not salary supplement. Remember, accountants also recommended making your wife/husband a shareholder, perfectly legal, and look where that's ended up - S660 and "income splitting".
Excuse the long post. Just ranting really, I'm not Denny or anything.
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Originally posted by clwd View PostBumfluff,
Are you using umbrella company or limited company? Lately, I have been thinking whether I should pay PAYE to myself rather than receiving min. wages and dividends because of the IR35 issue.
Is it worth running Ltd company to pay myself in PAYE? any comments?
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Originally posted by clwd View PostBumfluff,
Are you using umbrella company or limited company? Lately, I have been thinking whether I should pay PAYE to myself rather than receiving min. wages and dividends because of the IR35 issue.
Is it worth running Ltd company to pay myself in PAYE? any comments?
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Originally posted by Bumfluff View PostI know a few people who ended up with big tax bills due to such schemes, such schemes also tend to take a massive amount as commission. Personnally I rather sleep at night happy with my 66-70% rather than sh8tting it all the time with my 80%
Are you using umbrella company or limited company? Lately, I have been thinking whether I should pay PAYE to myself rather than receiving min. wages and dividends because of the IR35 issue.
Is it worth running Ltd company to pay myself in PAYE? any comments?
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Ditto
Sure - I know loads of contractors who use 'dodgy' methods and that's they're choice. But that then depends on your definition of 'dodgy'.
Loopholes, are indeed loopholes - they are legal at that point in time.
Some 'dodgy' schemes are simply schemes that have declared themselve to HMC and are therefore within the law.
It's each to their own - you make your choice.
I choose to run a limited and I return over 70% without taking the p*ss - I;m happy with that
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I know a few people who ended up with big tax bills due to such schemes, such schemes also tend to take a massive amount as commission. Personnally I rather sleep at night happy with my 66-70% rather than sh8tting it all the time with my 80%
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Dodgy tax schemes - are they worth it?
With all the hoohaa about IR35... getting contracts rewritten, hiring accountants, working practices, insurances, worrying about getting investigated etc, I'm surprised more contractors don't use "dodgy" tax schemes.
Most of these schemes exploit loop holes in the tax law eg. paying income to using overseas trusts then paying it back at a lower tax rate or MSCs, so arguably they are legal. Sure HRMC closes the loop holes eventually, but is it worth exploiting them while you can?
Does anyone have any experience with this or know of anyone getting caught by using such schemes?
I've tended to play it safe but I from time to time I do think what if I used so and so and got 80% net etc...Tags: None
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