Reply to: services company question on tax return

[poopscoop]

Does the company earn all its money through the 2 men?

We try.. we also get income from property...

[Epiphone]

what if you're a two-man company?

Does the company earn all its money through the 2 men?

[poopscoop]

It's pretty simple. As TLG says if you're a 1 man LTD then YourCo earns its money through you so you tick Yes. But you're not caught by IR35 so for that you tick No.

what if you're a two-man company?

[Moscow Mule]

Alternatively, if you didn't pay any dividends last year (as I didn't) you can leave it blank too:

Do not complete this box if all the income you derived from the company was employment income.

[Epiphone]

I take it that's a no then

It's pretty simple. As TLG says if you're a 1 man LTD then YourCo earns its money through you so you tick Yes. But you're not caught by IR35 so for that you tick No.

[morpheus]

I take it that's a no then

[morpheus]

Any more news/guidance regarding this? Cheers in advance.

[expat]

I really don't like the way they talk about providing services to a client "through" a company. I bet HMRC don't talk about their employees providing a service to the taxpayer "through" HMRC. I work "for" my company, not "through" it, and I bet 99% of other people in employment do the same.

I think you have nailed them there.

[The Lone Gunman]

Surely every 1 man Ltd would have to tick this box.
My plumber runs through his own Ltd. His company earns it's income from the work he performs.

As has been said above, this is twisted. The words used are to lead us down a personal services path. That is not how I work. My client wants a graphics driver or a working test environment or full set of requirements or whatever I happen to be working on. They pay me by the hour to produce those things. They may pay me to produce those things one after the other. They may pay me for sub sets of those, but it is the finished product they are paying for. If that product was not up to scratch or was not delivered then I would expect not to be paid, have to put right the error or to have to pay back part or all of what I have already been paid.

[flatfish]

More debate here ...

http://www.accountingweb.co.uk/cgi-b...%20%25B%20%25Y

[morpheus]

But surely leaving it blank when you 'should' be completing it is a greater offence?

For all we know they could be looking into people who leave the box blank!

[flatfish]

Damned if you do, damned if you don't ...

does that not apply to all the SA already submitted and not future SA

Correct. From the day they published the amended wording on the HMR&C site, I believe. That said, if they receive a few forms with the box blank after that date, are they going to pursue it?

I'd rather take that chance this year than fill in the box and flag myself up for who knows what. All in the vain hope that the legality of the question itself might be challenged before next year's return.

[AZZIK]

does that not apply to all the SA already submitted and not future SA

[poopscoop]

From what I gather it seems we do not have to answer this question for the 2007/08 Tax Return.

Q. How would HMRC penalise a taxpayer who completes this question incorrectly in the future?

A. HMRC has confirmed that ‘there will be no adverse consequences’ for taxpayers who have already submitted a 2007/08 tax return in which this box has been incorrectly completed.

4.9.08

[AZZIK]

HMRC has told the accounting lobby that the purpose of the question is to identify ir35 targets ( and managed companies ). so .... hold tight.

I'm still waiting for more advice - anyone else?