Reply to: Newbie: PayStream the options

[davedave]

to be honest it's not much extra take home at all, about 10 - 15 quid a week for me. But I'm not on a massive rate so better in my pocket than the umbrella companies

[MPwannadecentincome]

From what I understand in this thread, Paystream form your company, with you as the Director and then register you for flat rate vat, and then keep the "profit" on the vat reclaimed.
I assume they do this by charging your Limited Company a fee equivalent to the flat rate vat element.
I can see that you gain because there is no fee to you, Paystream earn their money from the vat.

But I was wondering how close this is to your company being an MSC with Paystream being an MSCProvider.

Although you may be the director and shareholder, but its obvious that Paystream are pulling the strings here of the company, after all there is no advice about joining the flat rate scheme, just a decision made for you.

I think its a clever idea for making a "no fee" umbrella. But I do think there is a risk here in an unknown area, i.e. where HMRC are going to choose to apply the legislation, where they may want to attack first.

If the your company were found to be an MSC then all the expenses would not atract tax relief, and tax would be payable on them. You personally are first in line for that bill.

Clever stuff invented for no real reason except to earn fees is not worth it , IMHO.

Phil

That seems to make sense - not for me then ltd co. a better option I think!

[MPwannadecentincome]

They don't charge a weekly fee, you only pay 10% of any expenses processed, up to a maximum of £50. First £20 is free, so if you process £60 you only get chrged £4

That does not sound like a significant amount of extra take-home?

[davedave]

Apparently they have the backing of the Professional Passport scheme, which is HMRC approved for auditing schemes. According to them HMRC have approved the no fee scheme as compliant

[PhilAtBFCA]

MyPayeSafeUmbrella

From what I understand in this thread, Paystream form your company, with you as the Director and then register you for flat rate vat, and then keep the "profit" on the vat reclaimed.
I assume they do this by charging your Limited Company a fee equivalent to the flat rate vat element.
I can see that you gain because there is no fee to you, Paystream earn their money from the vat.

But I was wondering how close this is to your company being an MSC with Paystream being an MSCProvider.

Although you may be the director and shareholder, but its obvious that Paystream are pulling the strings here of the company, after all there is no advice about joining the flat rate scheme, just a decision made for you.

I think its a clever idea for making a "no fee" umbrella. But I do think there is a risk here in an unknown area, i.e. where HMRC are going to choose to apply the legislation, where they may want to attack first.

If the your company were found to be an MSC then all the expenses would not atract tax relief, and tax would be payable on them. You personally are first in line for that bill.

Clever stuff invented for no real reason except to earn fees is not worth it , IMHO.

Phil

[davedave]

How does the paysafe option give you more take home and yet still be compliant?

They don't charge a weekly fee, you only pay 10% of any expenses processed, up to a maximum of £50. First £20 is free, so if you process £60 you only get chrged £4

[MPwannadecentincome]

I was offered the normal umbrella by paystream but the paysafe option gives me more take home, and is compliant, so a no brainer really

How does the paysafe option give you more take home and yet still be compliant?

[davedave]

[QUOTE=DonaldG;710363]The limit for Flat Rate Scheme - is £150K of turnover so just slightly out. £660K used to be the cash accounting limit, but this is now £1.3M[/QUO

Thanks, just a bit out

Even more reason why the umbrella company can't do it though.....

[DonaldG]

Sorry but its VERY simple. If you're turnover is above £660k (I think, or somthing similar) you can't use the flat rate scheme, which is why you have your own company as you obviously have a lower t/o than pay stream

The limit for Flat Rate Scheme - is £150K of turnover so just slightly out. £660K used to be the cash accounting limit, but this is now £1.3M

[davedave]

How do you think most umbrella companies do it?

They obviously find it VERY simple too.

They don't register you at all for flat rate vat as far as I understand it, so not sure what your point is.

Thats why they charge a weekly fee. I was offered the normal umbrella by paystream but the paysafe option gives me more take home, and is compliant, so a no brainer really

[Beefy198]

How do you think most umbrella companies do it?

They obviously find it VERY simple too.

[davedave]

Why would YOU have to become a director to register for flat rate VAT??

You might think it sounds simple, but that just raises more questions than it answers.

Sorry but its VERY simple. If you're turnover is above £660k (I think, or somthing similar) you can't use the flat rate scheme, which is why you have your own company as you obviously have a lower t/o than pay stream

[Beefy198]

Why would YOU have to become a director to register for flat rate VAT??

You might think it sounds simple, but that just raises more questions than it answers.

[davedave]

I just asked them what the difference was between a "normal" umbrella and the paysafe thing and it's quite simple (I think)

Normal umbrella = paye but tax relief on expenses , weekly fee

Paysafe = paye but tax relief on expenses , no weekly fee.

The reason you become a director under paysafe is to enable you to register for flat rate VAT, they keep the rebate as their fee which is why they don't charge you. I only have about £70 of expenses so get charged a fiver a week.

Early days with them but they seem OK so far

[DS23]

is it?