Reply to: Is Powerhouse a Giant?

Sadly, it's all too true ! I've been caught up in the SCO investigation and have (on advice from my accountant) agreed to pay up and walk away. The IR have given favorable terms for those wishing to settle including no interest on unpaid tax and no penalties. They have also agreed that if after investigation the scheme proves to have been legal they will refund the dosh .....yea like that's gonna happen. Anyway I look like having to stump up £20,000 ish which is nothing compared to a friend of a friend who was also on the scheme who has just had a bill for a cool £200,000 land on his doorstep. OUCH !

Foreign loans OMG

May friend got a letter from the IR in Dec 2004 regarding a foreign loan scheme he used through 'Consulting Overseas', in fact most people who used the scheme as COS got the letter.

Saw him on Friday, he has been given a tax bill for £65k for three years, if he does not pay by a certain date, the IR are going to add another £65k in penalties, total owed £130k !!!!!
A small mortgage accruing interest daily.

Consulting Overseas apparently have very good lawyers fighting the case, but a lot of people have just given in and paid. My mate wont pay and as a result is leaving the country on 1st July.

This is 100% true, I'm sure COS want confirm it but IR might.
It was also mentioned to him that his current COS scheme will probably be looked add.

no, someone else

via who? Norla?

foreign loans guys.... yes I know risky and probably illegal but who cares....

Yeah Becca

c'mon tell us! how are you paying less tax?

are you Mr Brown's mistress now ;-)

Rebbeca - who have you moved to now?

Thanks Planetit for the precision

One point for you is that Giant never explained this to me properly. But now I understand it thanks to your last post.

I have ditched Giant but not because they weren't accurate on this (not really their role since they don't act as accountant, but just as managed ltd company), and not because they are dodgy in paying (they've been fine).
But I have found a pay to pay less tax so hey! Presto...

no actually Planetit was right, I am talking nonsense

Glad we agree.

But you're still wrong. If you pay tax at the basic or starting rate the dividend tax credit meets your tax bill (so no more for you to pay personally). If you pay tax at the higher rate the dividend is taxed at 32.5%.

You were actually closer with your first answer, because your second one suggests that when you go over the higher rate threshold you lose all your starting and basic rate allowance. This is not true. I suggest you ask Giant for an explanation of how this all works. Then ditch them and use a proper company.

no actually Planetit was right, I am talking nonsense

However, with Giant Powerhouse there is still a thing to pay to the IR that hasn't been collected through the Giant payslips yet. The way I understand is (might be wrong): if you are paid a low salary (on which you pay only the basic rate of tax) and dividends on top (taxed at 19%), the IR will then want to tax your low basic salary at 22% or 40% rather than the 10% you originally paid, because now the total of your earnings make you not a basic-rate taxpayer any more but a higher-rate taxpayer - so they'll want to take: ((22-10)/100)*SALARY or ((40-10)/100) * SALARY

I think
>D

so what exactlya re the rules on dividentds and tax then?

does anyone have a definitive answer?

so how much tax do you pay on your dividends, Planetit?

Rebecca,

you’re taking nonsense. And I suspect that Giant told you this nonsense. Which is what I would expect from Giant.

well the point is that you initially only pay 19% corporation tax on dividends, however the IR will want additional revenue since your total earnings will in all likelihood make you a 22% rate taxpayer and possibly a 40% rate taxpayer too - but you've already paid 19% on all your dividends so you will only have to pay the difference to the IR - a part at 22%-19% and a part at 40%-19%

Their deal is good but don't forget that in the end, you are still left to pay over to the IR the difference in tax between the high rate (32%?) and the Corporation tax (19%) on what they pay you as dividends. It is still a decent return though, much better than normal umbrellas.

hmm, do you pay 32% tax on some of your earnings ?