Reply to: P35 Question 6

[xoggoth]

Am I glad I retired from contracting before they started sticking this question on everything.

[expat]

Don't get too excited. The second part of their explanation for the first question is to answer yes if the limited company, limited liability partnership or general partnership’s (the service company) business consists wholly or mainly of providing the services of individuals to clients

Well I could be wrong, but isn't that EDS? Or Accenture? Or Reed Group? Or the company that cleans my windows?

I don't think that clarifies anything at all, really...

No, No, No, and probably No. Services, yes. Of individuals, theoretically no.

[Sausage Surprise]

Accountant suggested Yes/No. I told them No/No!

[moorfield]

Bump...

[Hex]

PAYE income goes in the Employment Supplementary Pages:

http://www.hmrc.gov.uk/forms/sa102.pdf

[RockyBalboa]

They are reported in the usual places. The question asks you to duplicate this information so you put your salary and dividends in the boxes for salary and dividends and then the same figures again (aggregated) in the box re service companies.

So Dividends would go in Income question 3 but what about paye income? Sorry, this will be my first return.

[Jog On]

I'm answering 'no' 'no' as advised by my accountant.

This is because I'm outsourcing a software program that I want to sell over the net (still in development).

Accountant is also going to see if we can go for some R&D tax relief over it as well

[THEPUMA]

So where then do you report your income from paye/dividends from your LTD?

They are reported in the usual places. The question asks you to duplicate this information so you put your salary and dividends in the boxes for salary and dividends and then the same figures again (aggregated) in the box re service companies.

[RockyBalboa]

The wording of the question on the self-assessment form is "Total amount of any income included anywhere on this Tax Return, derived from the provision of your services through a service company - read page TRG 15 of the guide".

The relevant guidance says "You should complete this box if you have received any form of income (including employment income and dividends) during the year in question from a company through which you provided your services personally and of which you are a sole or joint shareholder.".

As I've said previously, my advice will be to report NIL income in there.

So where then do you report your income from paye/dividends from your LTD?

[THEPUMA]

But where does that leave me with the Self Assessment, doesn't the similar question on there have to match with the first of the paper P35 pair...?

The wording of the question on the self-assessment form is "Total amount of any income included anywhere on this Tax Return, derived from the provision of your services through a service company - read page TRG 15 of the guide".

The relevant guidance says "You should complete this box if you have received any form of income (including employment income and dividends) during the year in question from a company through which you provided your services personally and of which you are a sole or joint shareholder.".

As I've said previously, my advice will be to report NIL income in there.

[ittony]

I've just noticed how different this section is on the Employers' CD-ROM. The question (there's only one) and associated notes are pretty clear that a 'yes' would imply IR35-caught.

How this single question can possibly map onto the the paper form's two, I do not know. I can only imagine it's supposed to be the equivalent of the second question, and the first doesn't get answered. But where does that leave me with the Self Assessment, doesn't the similar question on there have to match with the first of the paper P35 pair...?

[EvilWeevil]

I'm confused..

If you answer No/No, where does that leave you in terms of the Self assessment?

Thanks.

My logic is that, given I answered "No, this company is not a service company", then on my self assessment, I shall be answering "0 - no income from service companies". And if that's wrong, so be it. The self assessment is designed to be completed by idiots like me, not to be the exclusive preseve of accountants and lawyers with an intimate knowledge of each and every nuance of the HMRC rules and regulations

[THEPUMA]

I'm confused..

If you answer No/No, where does that leave you in terms of the Self assessment?

Thanks.

I will be advising my clients not to put any figures in the box in question on the self-assessment form.

I am advised by someone who has taken counsel's opinion that the question is at worst illegal (the question is purely for their risk analysis purposes rather than enabling them to quantify the tax due, and that is not the purpose of a tax return). If not illegal, it is ambiguous, and if you don't have sufficient information to enable you to answer a question, you don't have to.

You could be aggressive and put something in the additional information box saying either "I haven't put any entry in the box requesting income derived from the provision of my services through a service company as I consider the question to be illegal." or "I haven't put an entry in the box requesting income derived from the provision of my services through a service company as I consider the question to be ambiguous" but I think both of those are likely to invite a challenge so my advice will be to leave box blank and not put any disclosure in the additional information box.

[RockyBalboa]

I'm confused..

If you answer No/No, where does that leave you in terms of the Self assessment?

Thanks.

[moorfield]

So just to be clear. In light of new HMRC information, am I right in saying if I am NOT caught by IR35 and NOT a managed service company I should answer No/No?

Lewis - my view also - check with your accountants on this (same as mine)because they seem to be assuming everyone is Yes/No and not telling their clients about it.