Is this illegal of my umbrella company?

[cwcsolutions]

Easy question...straight answer

When considering using a scheme that has been put to you by a promoter, ask this question;

“Will it or might it be expected to, enable any person to obtain a tax advantage and is that tax advantage, or might it be expected to be, the main benefit or one of the main benefits of the arrangement.”

Save £1000s!, we’ve all seen the claims.
If saving tax is a feature of the scheme that you have been offered, the answer to the above question is yes, and if the relevant tax provisions aren’t applied, i.e. PAYE regulations are fully operated when you’re talking about employment income, there isn’t a choice, HMRC instructs taxpayers to avoid entering into any such a scheme.

[lucyclarityumbrella]

I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

Until HMRC come knocking on your door for the personal tax liability which technically has nothing to do with them - as most people have said run a mile. TBH if they are offering 2 schemes, I wouldnt even touch the PAYE option - if they get done for the scheme side - who knows whether it will have a knock on effect on the other side. Find yourself a company that doesn't offer "scheme's", just straight forward PAYE umbrella.

[DolanContractorGroup]

Hi Kappa,

Our advice is to always stay clear of schemes which promote aggressive tax efficiency. HMRC doesn't ever 'rubber stamp' schemes, so no-one can ever be sure if it has been cleared by them.

You did mention that you would be okay with the scheme "if it's a 'grey area' which is not strictly illegal, and I won't be punished for it". We would urge caution with this approach as HMRC has been known to go back and close "grey" loopholes and pursue people for unpaid tax.


Kind regards

Zeeshan

[NeedTheSunshine]

Actually, forget that. Run. Give Contractor Umbrella a call.

This. Save yourself a world of pain further down the line and find another umbrella.

[webberg]

My umbrella company sets up two ways to get paid:

method a) is via PAYE, where they declare my gross pay as my salary

and

method b) is via their percentage scheme, where they declare some of my gross pay as my salary, and some of it they declare through the business. This means that they can pay a lower rate of tax through the company, and therefore I can receive more.

They asked me how I'd like to be paid, way a, or way b.

I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

My question to you guys is what they are saying true? Is it illegal to do what they are doing? If it's a 'grey area' which is not strictly illegal, and I won't be punished for it, then I'm okay with that, but I want to make sure I don't go against HMRC legislation.

Regards,

This is blatant tax avoidance.

The consequence of method b is an HMRC enquiry, perhaps incorrect tax returns and penalties, probably a demand from HMRC executed with some prejudice.

Don't do this.

[MonkeysUncle]

Actually, forget that. Run. Give Contractor Umbrella a call.

+1

[cojak]

Stay with method A.

Actually, leave the umbrella as you can be sure that they’ll close the company down the moment HMRC comes sniffing around method B.

[ladymuck]

I think anyone selling a scheme that claims to reduce your tax liability is on dodgy ground and you should walk away, fast.

I would also drop a note to HMRC with a copy of the correspondence and ask them to confirm if it is a legitimate scheme. We need to report these people because it's us that get chased a decade later when HMG change the rules and retrospectively chase for the money. The liability will ultimately rest with you, regardless of what they say.

[Old Greg]

Sounds dodgy. First question is on what basis is your non PAYE pay made. Dividend? Loan? Expenses?

Actually, forget that. Run. Give Contractor Umbrella a call.

[Old Greg]

My umbrella company sets up two ways to get paid:

method a) is via PAYE, where they declare my gross pay as my salary

and

method b) is via their percentage scheme, where they declare some of my gross pay as my salary, and some of it they declare through the business. This means that they can pay a lower rate of tax through the company, and therefore I can receive more.

They asked me how I'd like to be paid, way a, or way b.

I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

My question to you guys is what they are saying true? Is it illegal to do what they are doing? If it's a 'grey area' which is not strictly illegal, and I won't be punished for it, then I'm okay with that, but I want to make sure I don't go against HMRC legislation.

Regards,

Sounds dodgy. First question is on what basis is your non PAYE pay made. Dividend? Loan? Expenses?

[Kappa]

My umbrella company sets up two ways to get paid:

method a) is via PAYE, where they declare my gross pay as my salary

and

method b) is via their percentage scheme, where they declare some of my gross pay as my salary, and some of it they declare through the business. This means that they can pay a lower rate of tax through the company, and therefore I can receive more.

They asked me how I'd like to be paid, way a, or way b.

I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

My question to you guys is what they are saying true? Is it illegal to do what they are doing? If it's a 'grey area' which is not strictly illegal, and I won't be punished for it, then I'm okay with that, but I want to make sure I don't go against HMRC legislation.

Regards,