Reply to: Budget - Composite Companies Dead!

[Parasol_Service]

I have had a chat to Parasol about this already and they state they are unaffected by this. They state you will still be able to claim schedule E expenses as the payment is taxed at source.

I guess the jurys out for a while.

I'm going to wait til after christmas and speak to my tax advisor.

Thanks to SJD for lumping us in with some great comapines there ! NOT

Umbrellas" that fit the MSC definition will have problems with expenses (as per the draft legislation) - Expenses will be allowed on specific models but the days of P4 and the rest selling via expenses are limited. Parasol whilst being viewed as a PAYE Umbrella is about as far away as you can get from the MSC definition and NOT like ContractorUmbrella (as an example) at a detailed level.

Lesley - Parasol

[Xtrain]

"When I worked for a management consultancy last year, all their staff were paid to travel from London to Chester and put up in a hotel and able to claim all their outgoings. They did this for the best part of a year. When they went into their London offices they were not able to claim anything. I don't see how this is any different to what I'm currently doing.

Every Friday I work from home where I have a room fully kitted out with everything I need for my business - and a few mondays also depending on meetings etc. Obviously I do not claim anything in my expenses for this working from home (as I don't have any), but do when I work at the client site in London. I also have had to supply my own laptop for a couple of roles and have used it many times since on different client sites. Again in the management consultancy, all their staff were given a laptop - which they took home and were free to use in their own time. Again I fail to see how my laptop purchase through my business is any different to the Management Consultancies purcahse for their staff.

I would suggest you are 1 of the 5% who validly have to work from home, go to different sites etc. In 12 years of contracting I have met very few of contractors like yourself. Most of the ones I have worked with don't work from home, go into the same office everyday and quite often stay for years (I know one guy who has done 20 years at the same site). These are the ones who the IR are trying to catch on both divvies and expenses.

[hattra]

Why do none of you seem to go self employed?

In the early days, many did, but then an agency (can't remember the name) got billed for all the NI and PAYE that the contractors owed (about £2 million, IIRC), and no agency would deal with contractors on that basis ever again.

If you're willing to take someone on as self-employed, I'm game - got any IBM mid-range contracts?

[TinTin]

Victims of their own 'success'

A lot of older contractors will probably turn round and say 'I told you so' to the newbies that were attracted by the well written and marketed proposals for earnings up to 85% of gross fees. They were offering a Dutch auction as to who would outbid on expenses WITHOUT receipts FFS!. You only have to look at some outrageous claims by N*r*a and others to see that these don't stack up. A company based in the IoM with solicitors in the South, accountants in the Midlands and payroll in the North of the country, operating dividends from the Caribbean. do me a favour, IR are not THAT stupid. AFAIK, most of their clients are our cousins from Oz, NZ, SA etc that don't really give a monkeys about compliance. Most of the UK guys that I know of operate through Ltd Cos or legal umbrellas like Simon's and a few others. Greed is good, but don't end up like Gecko.

[hattra]

1) you presumably only did this one day a month or so. Not every day of the month.

2) You were not in the position of selecting a specific job, based upon whether you got a jolly out of it. The trips were incidental you day to day job, not the journey that you made to get to your job.

tim

Normally two or three days a week, but sometimes for weeks at a time.

And I ran the team and allocated the work, so yea I did choose the jobs I wanted to do

[Churchill]

Why do none of you seem to go self employed?

Most agencies will not deal with self-employed contractors.

[DodgyAgent]

because we are not allowed cortesy of old labour in the 70's

what is the difference between you and a plumber

(apart from the fact that plumbers are useful ) could'nt resist

[BoredBloke]

because we are not allowed cortesy of old labour in the 70's

[DodgyAgent]

Why do none of you seem to go self employed?

[BoredBloke]

"The IR had a go at me last year on the travel to work stuff and lets be honest 95%+ of contractors only have 1 permanent place of work and it isn't home or the umbrellas office. Normal employees cannot claim travel to work expenses, their breakfast / lunch / dinner nor can they get laptops etc... so you have to say the IR have got a point."

When I worked for a management consultancy last year, all their staff were paid to travel from London to Chester and put up in a hotel and able to claim all their outgoings. They did this for the best part of a year. When they went into their London offices they were not able to claim anything. I don't see how this is any different to what I'm currently doing.

Every Friday I work from home where I have a room fully kitted out with everything I need for my business - and a few mondays also depending on meetings etc. Obviously I do not claim anything in my expenses for this working from home (as I don't have any), but do when I work at the client site in London. I also have had to supply my own laptop for a couple of roles and have used it many times since on different client sites. Again in the management consultancy, all their staff were given a laptop - which they took home and were free to use in their own time. Again I fail to see how my laptop purchase through my business is any different to the Management Consultancies purcahse for their staff.

[Xtrain]

PBR solving 2 problems

I have had a chat to Parasol about this already and they state they are unaffected by this. They state you will still be able to claim schedule E expenses as the payment is taxed at source.

I guess the jurys out for a while.

I'm going to wait til after christmas and speak to my tax advisor.

The PBR is obviously tackling 2 areas that they see as issues:

1. Everyone in composites & MSC's saying they are outside of IR35 and therefore using the dividend option to reduce tax / ni

2. The claiming of expenses, in particular travel to work and subsistence, via all kinds of umbrellas (composite, MSC's and PAYE) using the dispensation angle.

They are going to close both these loopholes in April as that is exactly what they have said they will do in the PBR.

I would expect all the composite people to move over to single limited companies and no doubt their current umbrella / managed service provider will provide that option or they will go out of business.

But the expenses angle is a different matter. If it is so, that no travel to work expenses and subsistence can be claimed, then there is no point in using an umbrella, you might as well go on the agency payroll and cut out the cost of using the 3rd party umbrella. If any provider in this industry thinks it doesn't affect them then I think that is scandalous.

The IR had a go at me last year on the travel to work stuff and lets be honest 95%+ of contractors only have 1 permanent place of work and it isn't home or the umbrellas office. Normal employees cannot claim travel to work expenses, their breakfast / lunch / dinner nor can they get laptops etc... so you have to say the IR have got a point.

[simondolan]

I have had a chat to Parasol about this already and they state they are unaffected by this. They state you will still be able to claim schedule E expenses as the payment is taxed at source.

I guess the jurys out for a while.

I'm going to wait til after christmas and speak to my tax advisor.

For them to say they are unaffected is quite frankly wrong. The draft legislation quite clearly states that umbrella Companies are included (page 20 footnote). It also goes on to say (page 23) that people using MSC's (which include umbrellas by their definition) will be treated like normal employees for expense purposes ie you will be able to claim very little, and certainly not home to work travel which is of course the bulk of most contractors claims.

[wildstyle]

Bloody hell Simon, bit quick to take full advantage of this aren't you?

Thought it was just a PRE budget report???

As a result of this announcement, ALL Contractors and Freelancers who use a Managed Service Company, Composite company or employment services company e.g. Giant, Brooksons, Parasol IT or Prosperity 4 will no long be able to claim any expenses.

I have had a chat to Parasol about this already and they state they are unaffected by this. They state you will still be able to claim schedule E expenses as the payment is taxed at source.

I guess the jurys out for a while.

I'm going to wait til after christmas and speak to my tax advisor.

[malvolio]

It is quite wrong to tar all the MSC's out there with the P4 brush. It's all academic now anyway.

I'm not. Your proposal was to target some MSCs on some arbitrary basis. Expenses isn't the problem, which is why dispensations are a complete red herring. A company paying dividends to a pretend "shareholder" who has no other interest in the company is the problem.

[stackpole]

You tell 'em TE! I'm backing you because you've had plenty of time at "work" to read up on it.