Reply to: Cold calls from Aston Mae and Rouseau International

[kal]

My thanks to everyone who has responded. Rest assured i will not be part of such a scheme.

Also this thread lets others know within the community as to what opinions are.

thanks again!

Very true. When I started contracting I got contacted by Aston Mae telling me that they had been recommended to me by a mutual contact and I almost signed up, Luckily in this case the agency wouldn't go through their Umbrella and in the end I made the (correct) decision to go Ltd. I am now much more informed and wouldn't touch these dodgy schemes with a very long barge-pole! but didn't know any better back then.
One wonders how much they prey on the new/uninformed contractor to suck them in before they are aware of the risks they will be taking...

[andrewjsimpson1]

Aston Mae and Rouseau

So you've sought independent expert advice and the advice is don't do it. So why are you posting here - you'll only get the same advice. Don't do it.

My thanks to everyone who has responded. Rest assured i will not be part of such a scheme.

Also this thread lets others know within the community as to what opinions are.

thanks again!

[Martin at NixonWilliams]

I echo the advice of the other posters - do not get involved, it is far too risky.

The following link tells you all you need to know and provides HMRC's perspective:

HM Revenue & Customs: Tempted by Tax Avoidance?

[psychocandy]

I had a young lady from Rousseau hassling me for ages. She looked nice on her linkedin pic so I spoke to her a few times (sad I know).

She gave up in the end when I pointed out that I retained over 80% anyway so it wasn't worth all the hassle.

They are persistent mind. As others have said, leave well alone. When it all goes tits up they'll be off and you'll be the fun in the tulipe with HMRC not them.

[LisaContractorUmbrella]

Have a read: LLP Law Firms - changes coming in in April this year will stop LLP's being used as tax avoidance strategies.

[TykeMerc]

Craig, I suppose it's a one off effort setting that up, it may have been a bit of a farce to do, but you've got it in place.

That's the thing there's no one perfect way to approach how we handle our businesses, for you the straight forward LLP works fine, but the artificial schemes are just an invitation for grief.

[craig1]

Why do you use a LLP rather than just a limited company? Have you not just added more complication to your affairs by setting up a limited subsidiary?

I typically do 50/50 contracting and consultancy (slipping more towards contracting in the last few years). No Corp Tax, no PAYE, very simple accounts, very few HMRC interactions. Also, it's one of those subtle things, I work mainly with professional services firms who are LLPs, when I deal with a Partner in one of those places I cash in on the "I'm like you" mental thing to get more business. I do pay about 2-3% more in tax than an aggressive but ethically run Ltd contractor company but it's worth it for me because it's trivially simple accounts and far fewer HMRC interactions.

On the Ltd subsidiary, I agree, it was a pain getting it set up and I really didn't want to do it but it would have meant turning down a very lucrative contract. I worked out the entire arrangement with HMRC on group VAT (single VAT return for both companies) and also no Corp Tax as it's a simple pass-through arrangement: Ltd company contracts with agency and invoices but I am a LLP resource, my LLP bills the Ltd company for my time in the exact net invoice amount meaning, annual costs aside, that the Ltd company makes no reportable profit or loss. I've only had to use it for two contracts but it was probably worth it.

[Waldorf]

As someone who has legitimately contracted through an LLP for many years,

Why do you use a LLP rather than just a limited company? Have you not just added more complication to your affairs by setting up a limited subsidiary?

[craig1]

Oh as well as the astronomical risk profile of any tax avoidance scheme, there's the not insignificant issue that some agencies will not contract people using LLP's (allegedly) so you've that potential problem too.

That's very true. Most will but I've discovered two types of agencies that wont:
1. Those that think an LLP isn't a limited company despite the first word of LLP being Limited!
2. Those that think all LLPs are scam vehicles and they want to reduce their risk profiles.

It's not small agencies that are saying "no" as well, some of the larger ones simply won't touch an LLP.

As someone who has legitimately contracted through an LLP for many years, it annoys me endlessly that these tax avoidance scheme companies use LLPs as one of their tools. I had to set up a subsidiary Ltd company to a contract a few years ago as the agency point-blank refused to touch me as a LLP for both of the reasons I gave! Thankfully, HMRC were very understanding about it and gave me lots of advice including using group VAT status and an understanding that it'd just be a pass-through arrangement to my main LLP to make my Ltd company administration as lightweight as possible.

[TykeMerc]

Oh as well as the astronomical risk profile of any tax avoidance scheme, there's the not insignificant issue that some agencies will not contract people using LLP's (allegedly) so you've that potential problem too.

[Waldorf]

I thought I had read something about the use of LLP's for this sort of tax dodge were being outlawed, although I have not really looked into it as I have no intention of using such dodgy schemes.

I would avoid these schemes like the plague, have you not been watching the new lately, these high risk schemes are very risky.

BTW - The actual tax you will pay is very small, probably 1-2%, the rest of the 16% dedution is retained by the scheme provider as their fee and commission to introducers, such as agencies, accountants etc.

[TykeMerc]

If it looks too good to be true it undoubtedly is.

The approach you describe is clearly and obviously artificial it will attract HMRC's attention and anyone using the scheme will no doubt end up with a long and nasty case to defend.
The scheme providers will of course claim that it's legitimate and will never result in any nasty fallout, but they're in it to make money for themselves so they really don't give a damn if down the line you get stitched up for all the unpaid tax, NI and penalties.

Avoid like the plague.

[craig1]

I posted a very long reply to a similar subject a while ago, but in summary: Unless you're going into business with individuals you can 100% trust, and even then be careful, avoid becoming a member of an LLP like the plague, the consequences of it can be quite scary and EVERY member of the LLP is subject to the same consequences if there's wrongdoing.

Also, remember that these "warranties" given by the companies are promises backed up by a limited company based abroad. Even if you can get to them abroad legally, all they need to do is "phoenix" the company and they can walk away with you holding a bit of paper that says the now dead company warrants that it's a legal scheme.

[eek]

Are they actually pocketing 16% and only paying you 84%.

Given that I can legimately take over 80% as income via a limited company and more if I put bits of it in a pension why would you bother...

[BlasterBates]

No scheme will allow you not to pay tax without a decade long battle with HMRC.

Always remember that, in the unlikely event that it is legal, you and all the people with you in the scheme will have to fund a very expensive legal team to find out.

HMRC now use a simple argument in their challenges, if the money is yours to do with as you wish, i.e. you select an intermediary, HMRC say it's income before it gets to the intermediary, and therefore is taxable at that point. I don't see how any scheme can win that argument.

Is it worth it?

Absolutely not.