Reply to: Self assessment - "service company" income

[Lewis]

From PCG FAQ:

"For any enquiries starting after January 1st 2007, the PEI will also include Income Tax Aspect Enquiry Cover with an excess of £150 and an Upper Limit of Indemnity of £1,500 – this is new cover."

Ok I hadn't realised that, that's good to know. So it is just PAYE audits that aren't covered in the standard membership. Interestingly I read this recently ... http://forums.contractoruk.com/accou...vs-qdos-4.html

I am a member of the PCG... I do know what questions to ask - been a contractor for over 10yrs now and v.clued up on IR35, S660, etc. I appreciate that I should of bought the PCG Plus cover, but I did expect to get better help from the PCG rather than the responses I have had ... which are basically, you're not a member of PCG Plus therefore we can't help you with anything until IR deem you are caught - then come back to us and your insurance will kick in for representation.

I'm QDOS all the way

[QwertyBerty]

As an aside, with PCG standard you will have nobody to help you in the event of an aspect enquiry which is where IR35 investigations usually come from.

From PCG FAQ:

"For any enquiries starting after January 1st 2007, the PEI will also include Income Tax Aspect Enquiry Cover with an excess of £150 and an Upper Limit of Indemnity of £1,500 – this is new cover."

[THEPUMA]

As per my previous post on this subject, I am going to advise my clients to ignore the question on the self-assessment form on the basis that it is illegal and/or ambiguous and therefore they have no obligation to answer it.

[Lewis]

I just found this on ICAEW web site ... http://www.icaew.com/index.cfm?route=157536

We have had a number of enquiries from members concerning the service companies question on page TR4 of the 2008 SA tax return. We had an indication 2 years ago that a question of this type was going to be added to the Tax Return, but unfortunately no subsequent consultation on either its precise purpose nor the wording.

The question is similar to that which has appeared on this year’s Form P35 and on which we gave advice earlier in April, except that in addition the taxpayer is required to quantify the ‘Total amount of any income included anywhere on this Tax Return, derived from the provision of your services through a service company.’

We have a number of concerns about this and have written a joint letter, together with the Chartered Institute of Tax, to HMRC.

We will publish further guidance about how to complete this question when we have received further clarification from HMRC.

2 May 2008

No updates as yet ....

[Lewis]

Just goes to show, no one really has a scooby do they?

Flipping HMRC muppets.

Exactly ... even the HMRC clarification is vague!

[moorfield]

Just goes to show, no one really has a scooby do they?

Flipping HMRC muppets.

[Lewis]

ICAEW advised No/No unless you were IR35 or umbrella, managed service co. (This is partly why I went No/No in the end.)

http://www.icaew.com/index.cfm?route=157095

This is an old link before "clarification". There is new advice on there now.
http://www.icaew.com/index.cfm?route=157373

[Lewis]

As I posted above , Go to Interesting Posts in the PCG forums. Then read the latest ones that are titled P35. But you don't have to worry with a NO/NO.

I have PCG Standard.

I've just scanned the threads (e.g. http://www.pcg.org.uk/info/ubbthread...Number=1075232) and I am not convinced that the majority of experts advise no/no. Some posters do say their accountants have advised no/no but others say QDOS advise yes/no and Abbey Tax advise yes/no. I personally called the PCG helpline, read the PCG document, spoke to my accoutants and called QDOS who insure me for IR35. They all advised yes/no but I decided to follow the ICAEW advice of the time (which I believe has now changed) to answer no/no. But I'm not really interested in the P35, that's done and dusted, I am interested about the self assessment form. But it sounds like the two are linked in such a way that if I have answered no/no I must leave the question blank on the SA form. Is this definitely the case ... anyone?

As an aside, with PCG standard you will have nobody to help you in the event of an aspect enquiry which is where IR35 investigations usually come from. You should either upgrade to PCGPlus or take out a QDOS product (starting at £99). That way you get representation right from the outset and have the most chance of killing the aspect enquiry and preventing a full-blown IR35 dispute. Personally I think this is much more important than our answers to the P35 questions as you could still be randomly be selected for investigation at any time. Although of course, even with the insurance in place, you want to do everything to prevent investigation. Hence my answering no/no and asking now what to do about my tax return....

[moorfield]

My understanding is that PCG, Abbey Tax, QDOS and ICEAW are advising Yes/No but I am happy to be corrected.

ICAEW advised No/No unless you were IR35 or umbrella, managed service co. (This is partly why I went No/No in the end.)

http://www.icaew.com/index.cfm?route=157095

[Likely]

What experts do you know of that are advising No/No following HMRC clarification on the matter?

My understanding is that PCG, Abbey Tax, QDOS and ICEAW are advising Yes/No but I am happy to be corrected.

{Edit} do you have PCGPlus or QDOS cover?

As I posted above , Go to Interesting Posts in the PCG forums. Then read the latest ones that are titled P35. But you don't have to worry with a NO/NO.

I have PCG Standard.

[Lewis]

PS. And no , most experts agree it should be a NO/NO

What experts do you know of that are advising No/No following HMRC clarification on the matter?

My understanding is that PCG, Abbey Tax, QDOS and ICEAW are advising Yes/No but I am happy to be corrected.

{Edit} do you have PCGPlus or QDOS cover?

[Likely]

As it happens I answered No/No myself. I believe the advice of the "experts" is mixed (even following HMRC clarification) with most favouring yes/no. However they all seem to agree it doesn't matter what has been entered this year. Unless you want to believe HMRC were lying when they said they would not use the information this year to target investigations. I'm not quite that paranoid yet.

Next Year , in HMRC's office , after the current permie staff has turned over.

Permie1: Hmm, lets see who to investigate? Hmmm there are some companies that have filled in "Service Company". These companies obviously have to do with contracting. Why do we have to bother looking in other accounts when they have conveniently told us that they are "Service Companies" ?


Permie2: But we have promised last year we wouldn't use that box to target investigations ?


Permie1: Ohh shutup Mahmud ! Get back to your Minesweeper and watch how I will get my bonus !



Anyway. My accountant has changed the anwer for me online. I wonder now if HMRC has a way of telling changes were made. Yes I am paranoid.

PS. And no , most experts agree it should be a NO/NO

[Lewis]

If you read the PCG forums , go to Interesting Posts , all latest interesting posts are about P35. You will find that most PCG members have answered NO/NO and accuse the PCG's formal advice. In addition googling P35 on its own shows comments by Tax companies. They suggest that HMRC interprets "Service Company" one caught by IR35 , hence one that should operate within IR35.

As it happens I answered No/No myself. I believe the advice of the "experts" is mixed (even following HMRC clarification) with most favouring yes/no. However they all seem to agree it doesn't matter what has been entered this year. Unless you want to believe HMRC were lying when they said they would not use the information this year to target investigations. I'm not quite that paranoid yet.

[EvilWeevil]

I'm with the current majority. I answered the P35 question in line with the advice on the employer's CDrom ("no"), and then given that my company is not a service company, according to their P35 return, I entered a zero in the SA box.

[ratewhore]

I thought the PCG guidance was fairly clear. Whether you have to be a member to see that piece I'm not sure.