Reply to: IR35, Umbrellas and HMC&R

[partimer]

IR35 again

I'm going to leave the expenses discussion well alone since I've said more than enough in the past.

These discussions get very polarised and I'm not going to take sides. Going Ltd or using a Brolly is up to the individual. Get all the facts and see what suits your particular circumstances. Don't take anybody's word, do the research - it's your money.

The Artic case does have a bearing with IR35. You would not realistically pay yourself dividends if you were inside IR35. What you do with the dividends (splitting it between you and another person) is than subject to S660a. What makes S660a so bad is that it's a reinterpretation of existing rules. No new laws. No changes. Just that the reinterpretation goes against everything we were advised for the last decade and they want to back date the tax.

If you never paid yourself a dividend (inside IR35) then S660a is not an issue. I assume that's what the guy is on about.

Back to the original discussion. You need a **proper** defence for IR35. I'm outside IR35 because I say I am, is not going to work. Don't stick your sand in the head.

What always amazes me is that many people I work with think they're outside IR35 even though I know they can't pass my noddy tests e.g.
a) Do you get **invited** to the customer's Christmas party ? (Why ? You're not an employee.)
b) Do you get training courses paid for by the customer ? (Why ? You're not an employee.)
c) Do you take advantage of Gym membership, staff discount ? (Why ? You're not an employee.)
d) Do you have the same badge/pass as an employee ? (Why ? You're not an employee.)
etc. etc.

You get my drift.
Have a proper defence whether it's a Brolly or Ltd. I know many people who use Brollies and know what they can and can't claim. They're happy with their arrangements. Generally, if you want to run a proper business, go Ltd. If you're happy to be a bum on seat contractor then use a Brolly. Obviously you can have a mixture of non-IR35/IR35 contracts which would make sense to go Ltd.

Last word. The longer you're in this business the more chance of a visit from Hector. One visit in 15 years is a great ratio in my opinion ... Better than my ratio.

[boredsenseless]

There is only one way to avoid all the uncertainty...

Walk up to your local HMRC office with contract in hand and say 'am I IR35 or not?'

Obviously the answer you get will be biased, but if you really are outside they will tell you. They'll even write it down for you - and then you covered.

I can see however that most people wouldn't want to do this, its a bit like going past a cop car at 33mph and then reversing back to ask if he thought you were speeding...

--- Has no-one else wondered why the HMRC are encouraging more and more to go umbrella. Its got nothing to do with the fact that at the moment they have 100,000s of companies to investigate but if they can get all them to join about 20 umbrellas then the burden of contacting all these companies goes, and they have a ready made list of people over-paying expenses. Simple calculation really - mr umbrella what is the maximum you allow your 'employees' to claim in unreceipted expenses? Oh and could you show me a print-out of names and addresses of all employees paid that amount?

And they are entitled to ask that question cos they are the Inland Revenue and they are talking to an employer to ensure they are meeting their tax liabilities and they can only do that if they have the figures.

[Robot]

Before everyone else shouts it - you can't get back more than you've paid out in expenses. This subsistence thing just means that the umbrella doesn't need to report to the Revenue that they've paid you certain expenses.

Bradley

This is absolutely 100% correct........but no one ever listens!

The booklet 490 9.6 - Round Sum Allowances

If an emloyer (employer on this occassion is your umbrella company) pays an employee a round sum allowance for business travel (travel includes subsistence), it is not regarded as a reimbursement of actual expenditure incurred. The whole of the allowance should be treated as gross pay for PAYE purposes.

Now Contractor Messiah, I am sure the IR would cut a deal with you, you show me your receipts and I'll add up all the round sum allowances you have taken and we will take one away from the other and you pay me the tax on the difference + Penalties and interest...........Sorry Mr Contractor Messiah you have not kept any receipts, why would that be? Cause my employer told me not to..............


Mr Brown will be 'lovin it'.

Robot

[G8_Summit]

Contractor Messiah

Contractor Messiah, the evidence is all there. You consistently and religiously spout cr@p. You are Chico - I claim my 5 pounds.

[Contractor Messiah]

Poor Soul

Denny

I would suggest you check out more umbrellas.

Some are actually very, very good, with no sign on fee's, break out clauses, and actually a very cheap fee.

Regarding Employers Tax, if you fall inside IR35, you have to pay it period!!!! And pay 12.8% you do!!!!!!!

[Denny]

Umbrellas

Am I the only person who is not satisfied with Parasol or other similar umbrellas that impose an absurd amount of sign up terms and conditions?

When I negotiated my recent contract with them, they bombarded me with endless forms to fill out and seem to imply in their own terms and conditions that the agency not me, as the contractor, was their client. Well strictly speaking that would be true if I could control how these administrators operate, but I can't so I am entering into a double whammy situation.

The fundamental problem I have with umbrellas is this, particularly in the light of the above: why on earth should contractors have to pay employers national insurance if we are not deemed to be outside of IR35 because we are paid PAYE? Just by going through an umbrella, taxes and NI are taken in full from all of your earnings, not just in part. If the umbrella is run by a separate legal entity that I have little control over my relationship with them as suggested by Parasol's terms and conditions. If that is the case, then I should only be paying employees national insurance, not employers as well.

It is unconvincingly argued by some that the higher daily or hourly rates we are paid covers all these additional expenses, but the rates we eventually get are based purely on market conditions, not on considerations of contractors' additional running costs. Furthermore, if you take into account, sickness pay, holiday pay, between contract survival money, employers NI, various indemnity and IR35 insurances, self marketing to own client costs, between contract marketing costs to agencies (which can't be included in the dispensations once you take on a contract, only those from the contract itself) you are simply left with a manageable employee salary - roughly what any permy would get. Plus we have all the additional risks associated with being self-employed with no employee rights to protect us.

From now on it's limited all the way. The last thing I want is for any umbrella to view the employer, employee relationship too literally and see me as their boss who can independently act against my own instructions rather than view me me as their client.

I suppose the moral of my tale is this: if I am going to be set up as an owner managed business, or be deemed as such, by an agency who insists I go through limited company status, then I want the benefits associated with that status, not just the pitfalls and risks. At the moment, self employed contractor is a byword for 'mug.'

[Bradley]

Re:Expenses

They have various food subsistances that have been approved from the Inland Revenue, which I am entitled to due to the fact that I leave work at a certain time and arrive home.

Before everyone else shouts it - you can't get back more than you've paid out in expenses. This subsistence thing just means that the umbrella doesn't need to report to the Revenue that they've paid you certain expenses.

[Contractor Messiah]

They have various food subsistances that have been approved from the Inland Revenue, which I am entitled to due to the fact that I leave work at a certain time and arrive home.

There fee is extremely low as wel for some reason, but I am not going to complain about that.

Dundee

Why the spite, I do believe in what I am saying because it is true, I was indeed a member of the PCG, and I paid them money from their very birth in 2000. Bottom line is they tried to defend me and lost just like they are with the Artic Case. So I am sorry if I think that I am a little bit of an IR35 bod, but that is because I have invested the time doing so. I have checked the web, various sites, umbrellas. I was nigh on £30000 out of my own pocket, so why would I try and give people the wrong information. I am fully aware of the difference between IR35 and S660, but the bottom line is when they lose the Artic Case, and lose it they will, it will all fall under the IR35 umbrella!

[Robot]

Interesting

Both of them offer a very good service, it just comes down to how much return I get of a week, and with NLL it was that little bit higher. Neither of them are hard sellers, not like P4 and others, they generally wanted what was best for me. So I would recommend them both, should the service with NLL not be upto scratch I would have no reservations with Parasol.

How can you get a little bit more?

Lower fees is the only one I can see!

Claiming more expenses? This option should not make a difference, if you spend £15 on train fare and £5 for lunch then that is how much you should claim £20 nothing more. Have they got a 'dispensation' ?

Robot

[Dundeegeorge]

How apt indeed

You are for sure the bible on IR35.
You seem to have the slightest of knowledge, (you were unaware that Arctic were being done under S660), you post with authority and seem to believe that the nonsense you peddle is the revealed work of god.
I sincerely hope that no-one takes you seriously for even half a minute.
Anyone who really wants to know about IR35, Ltd companies and umbrellas should stay far away from you. If you do want to know the truth, do the research, it's all on the web somewhere, or join the PCG, or do whatever.
Just don't waste your time reading this numpty's drivel.

[Contractor Messiah]

Parasol

Both of them offer a very good service, it just comes down to how much return I get of a week, and with NLL it was that little bit higher. Neither of them are hard sellers, not like P4 and others, they generally wanted what was best for me. So I would recommend them both, should the service with NLL not be upto scratch I would have no reservations with Parasol.

Only time will tell.

Witchy, it is Min Wage and Dividends, you being a 100% shareholder, means roughly translated to a composite arrangement, and you inviting the IR to investigate you.

Check out a company like I said called ecomposite, who were shut down in May 2005, and tell me the difference to what they did and what your current solution provider offers. Better stil phone them and tell them you have been told that this is the case and see what jargen they spout you.

[Witchywoo]

Actually it is not a composite, I am 100% shareholder, but if you know better, that is fine.

[Ali]

I'm looking into going for NLL also. I also managed to narrow the list down to NLL or ParasolIT. What investigations have you done wrt Parasol?

[Contractor Messiah]

They are only charging me £15 a week for this, that includes all the insurances and administration.

With regards to the SSP, I can claim for that anyway as long as I have a valid doctors note, so in fact it is neither here nor there whether they pay it, the fact that they help me sort it, is just another benefit for me.

With regards to holiday pay granted they do not pay me when I am away but they do give me the full value of my net take home every week, so that I can decide how much I wish to put away.

All in all I am a very happy individual today and I would recommend No Longer Limited to anyone. Lets see now if they pay me on time and correctly.

[planetit]

This No Longer Limited have said that they include the 5% I am intitled to for not operating a limited company

What does this mean?

Why are you entitled to 5% of something for not operating a company.