Reply to: 97% salary retention with umbrella company

[eek]

Pseudo contractors. AKA forced Friday to Monday workers.

I suspect currently it's a lot more likely to be:-

Made redundant
Eventually find some work on a temporary basis via an umbrella because the end client and agency don't want the hassle of employing someone for what may turn out to be very short term work.

[NotAllThere]

Nonsense. Why are they still being sold in the guise of "compliant" umbrellas? The people buying into them are not long-term UKContractor buddies, but newbies and low paid pseudo contractors.

Pseudo contractors. AKA forced Friday to Monday workers.

[GregRickshaw]

Don't confuse two separate things. Schemes such as EBTs and various others have a real purpose and are perfectly sensible ways of tax mitigation for the right people. Problem comes when you aren't a "right" person and use them anyway. HMRC clearly (and rightly) aren't going to criminalise those schemes.

However if the base tax rate is 20% and someone is offering you an effective base tax rate of 5%, then it's up to you not to be taken in by the snake oil salesmen. It's because people are both scared of taxation and unwilling to look carefully at what they are signing up to uncritically that the problems arise.

There is clear guidance on HMRC's view on the use of schemes on their website and why they are a bad idea (and has been since about 2010). Start from here...

HTH.

Yes I totally agree with you, I did try to indicate this rather clumsily I guess.

[malvolio]

The only reason I mentioned Spotlights was because you linked to them first...

Given that schemes have been an issue for contractors for 20 odd years I would have thought any sane contractor would be of the viewpoint - just say NO but clearly you've learnt nothing over the years..

Nonsense. Why are they still being sold in the guise of "compliant" umbrellas? The people buying into them are not long-term UKContractor buddies, but newbies and low paid pseudo contractors.

Go back on the history of this site wrt Schemes and EBTs and see who was constantly being shouted at for saying that they were well dodgy, they shouldn't be used or they'll come back and bite, complete with a good summary of exactly how. My views haven't changed since 2006 - use these things and you're a fool. Sadly there are a lot of fools out there, and more every day.

[eek]

If a scheme is to provide tax relief for the costs of stockholding for a used car salesman is used by someone who is not a used car salesman, then they are not the right person. EBTs are to provide tax relief for tax-paid investments such as pension funds and trust holders being paid from long-term investments, not for people processing a regular income. The recent relief loans are to help restart a business affected by the lockdowns, not as a long term loan so you can have some time off.

"Ooh look a this big shiny thing, I'll have some of that" does not bar you from applying a little bit of common sense and then realising you are about to make a big mistake

As for Spotlights - how many scheme users have read them before joining the bandwagon? Or know that they exist?

The only reason I mentioned Spotlights was because you linked to them first...

Given that schemes have been an issue for contractors for 20 odd years I would have thought any sane contractor would be of the viewpoint - just say NO but clearly you've learnt nothing over the years..

[malvolio]

If a scheme is to provide tax relief for the costs of stockholding for a used car salesman is used by someone who is not a used car salesman, then they are not the right person. EBTs are to provide tax relief for tax-paid investments such as pension funds and trust holders being paid from long-term investments, not for people processing a regular income. The recent relief loans are to help restart a business affected by the lockdowns, not as a long term loan so you can have some time off.

"Ooh look a this big shiny thing, I'll have some of that" does not bar you from applying a little bit of common sense and then realising you are about to make a big mistake

As for Spotlights - how many scheme users have read them before joining the bandwagon? Or know that they exist?

[eek]

Don't confuse two separate things. Schemes such as EBTs and various others have a real purpose and are perfectly sensible ways of tax mitigation for the right people. Problem comes when you aren't a "right" person and use them anyway. HMRC clearly (and rightly) aren't going to criminalise those schemes.

However if the base tax rate is 20% and someone is offering you an effective base tax rate of 5%, then it's up to you not to be taken in by the snake oil salesmen. It's because people are both scared of taxation and unwilling to look carefully at what they are signing up to uncritically that the problems arise.

There is clear guidance on HMRC's view on the use of schemes on their website and why they are a bad idea (and has been since about 2010). Start from here...

HTH.

It really doesn't because you aren't blooming clear enough - anything on here that vaguely says a scheme is OK for the "right people" will encourage people thinking about a scheme that it's OK because they are that "right person".

But Unless you earn multiple million pounds a year you should be doing everything you can to avoid using a scheme...

EBT and other tax avoidance schemes are things for people who can afford to risk £200,000 to save themselves £500,000+ and are happy to accept that they may need to repay the £700,000 or so...

Basically if you are on this site don't go near a scheme...

Oh and you should start from Umbrella companies offering to increase your take home pay (Spotlight 45) - GOV.UK and Comparison and broker websites marketing umbrella companies are not always what they seem (Spotlight 55) - GOV.UK

[malvolio]

The rules are still very confusing to mere mortals (including me) and possibly half of HMRC, there needs to be a way of letting contractors know what is questionable and what is not. While these schemes are still technically legal it's very hard for people to not grab them and make use.

The Government or HMRC will not publicly make available guidance/rules as it's in their own interest to keep these schemes going, for the huge conglomerates

Sadly unless you are party to forums like this or someone who has been bitten, there will be hundreds sign up. As I did when I knew nothing (still don't) about tax rules.

As much as we despise these companies, they are probably doing nothing wrong, questionable yes... wrong no.

Don't confuse two separate things. Schemes such as EBTs and various others have a real purpose and are perfectly sensible ways of tax mitigation for the right people. Problem comes when you aren't a "right" person and use them anyway. HMRC clearly (and rightly) aren't going to criminalise those schemes.

However if the base tax rate is 20% and someone is offering you an effective base tax rate of 5%, then it's up to you not to be taken in by the snake oil salesmen. It's because people are both scared of taxation and unwilling to look carefully at what they are signing up to uncritically that the problems arise.

There is clear guidance on HMRC's view on the use of schemes on their website and why they are a bad idea (and has been since about 2010). Start from here...

HTH.

[eek]

The rules are still very confusing to mere mortals (including me) and possibly half of HMRC, there needs to be a way of letting contractors know what is questionable and what is not. While these schemes are still technically legal it's very hard for people to not grab them and make use.

The Government or HMRC will not publicly make available guidance/rules as it's in their own interest to keep these schemes going, for the huge conglomerates

Sadly unless you are party to forums like this or someone who has been bitten, there will be hundreds sign up. As I did when I knew nothing (still don't) about tax rules.

As much as we despise these companies, they are probably doing nothing wrong, questionable yes... wrong no.

Wait a few days and there will be a solution that solves most of your issues....

[GregRickshaw]

So confusing still

The rules are still very confusing to mere mortals (including me) and possibly half of HMRC, there needs to be a way of letting contractors know what is questionable and what is not. While these schemes are still technically legal it's very hard for people to not grab them and make use.

The Government or HMRC will not publicly make available guidance/rules as it's in their own interest to keep these schemes going, for the huge conglomerates

Sadly unless you are party to forums like this or someone who has been bitten, there will be hundreds sign up. As I did when I knew nothing (still don't) about tax rules.

As much as we despise these companies, they are probably doing nothing wrong, questionable yes... wrong no.

[ladymuck]

The word "Neutral", you've got that from a phone number lookup that is telling you whether it is harassing, spam, neutral or safe, not that the company is called "Neutral"

And that the type of company is 'Financial Services'

Gave it a call, redirects to an international number judging by the type of ringing. No answer sadly.

[eek]

Tax Club are still claiming 90%, and still using logos for NHS, Sky etc.

I'm more scared and concerned about the ones that offer 60-70% personally..

[WTFH]

Tax Club are still claiming 90%, and still using logos for NHS, Sky etc.

[WTFH]

I couldn't hear properly the name of the company, but the phone number is +44 1923 882548. I tried a google lookup and it shown the company might be NEUTRAL FINANCIAL SERVICES? Couldn't find their website.

The word "Neutral", you've got that from a phone number lookup that is telling you whether it is harassing, spam, neutral or safe, not that the company is called "Neutral"

[eek]

People will still sign up in droves


Sent from my iPhone using Contractor UK Forum

For they know no better and it still isn't obvious why it's a bad idea.

Hopefully that will be fixed soon and there will be an easy means of identifying whether an umbrella is dodgy or not

At which point anyone greedy and stupid enough to join such a scheme won't have my sympathy.