Freelance Limited Company (FLC) offering from IPSE

[FK1]

Why not Limited Liability Partnership (LLP) ?

The LLP format was introduced in 2001 by the LLP Act 2000 to meet the needs of certain professions that usually form traditional partnerships, such as solicitors, doctors, accountants, architects, etc. LLPs provide the same benefits as traditional partnerships with the added benefit of reduced financial responsibility for their members. An LLP structure is a good choice for businesses with minimal employees (if any) and only a few partners, each of whom makes similar contributions to the business, enjoys equal rights and responsibilities, and takes a similar share of business profits.(Source: rapidformations, a link was deleted)

20% on income between £0 – £31,785 (you will start paying this rate on income above the £10,600 Personal Allowance threshold)
40% on income between £31,786 – £150,000 (you will start paying this rate on income over £42,385)
45% on income over £150,000

So with income about £84K(excl. VAT) in summary for two partners (for example a contractor and his helpful wife) it might be roughly 24% in tax (according to some LLP tax calc) if every partner not exceeding £42,385 threshold.

Why not to propose LLP for one person (aka LLC, LL Contractor) instead of FLC?
I am not an expert in that, but LLP option deserves some analysis. It might be not good as well as agents would require everyone use LLC or FLC for their sake.

P.S. As a variant, a few contractors might form LLC. Limited liability for temporary employees.

P.P.S. But the best thing is to make fair tax for "inside IR35" contracts considering real world when we might mix "outside" and "inside IR35" contracts as it depends on a client/project.

[cojak]

An LLP?

Why don't you ask stek? I'm sure he'll explain why:
http://forums.contractoruk.com/accou...ml#post1621123

Need more info? How about this http://forums.contractoruk.com/busin...91996-llp.html

Or maybe you'ed like to know the pros and cons...
http://forums.contractoruk.com/accou...pros-cons.html

[TheFaQQer]

Just to make those who don't frequent the IPSE forums aware, there were two posts last night which look to address some of the frequently asked questions about the FLC which can be found here.

I would urge you to read them, particularly if you haven't responded to the survey yet.

[eek]

Just to make those who don't frequent the IPSE forums aware, there were two posts last night which look to address some of the frequently asked questions about the FLC which can be found here.

I would urge you to read them, particularly if you haven't responded to the survey yet.

Yep I have....

It misses out a few points totally.

1) The idea that any FLC IR35 test will be fundamentally different to the one applied elsewhere. Especially when the decision may be moved from a supplier side decision to a client sided decision.

2) if its supposedly personal choice how do you stop companies forcing you to use it. IPSE still don't seem to have grasp the difference between required in law and required because it saves the end client hassle or a few quid (see opt in, opt out)....

Especially if a) as expected clients will be jointly liable for some part of the tax, b) the FLC legal entity allows people to escape IR35 in a way a normal ltd co won't

3) You have no explanation as to how it will be abused by companies forcing bogus self-employment even when plausible examples are given. In fact the only response so far posted is that they won't be able to do that because a,b,c, minor implausible technicality d

4) Contractors (using an FLC entity to contract) will need a business plan
most Contractor's business plan will be keep skills up to date, stay or move up the value tree, retire. The business plans so shown are not those of your typical contracting freelancer...

5) The idea that expenses will be allowed when no one else will be allowed them Then sweeping the argument under the table because the tax regime isn't being discussed yet.

Given that the community IPSE forum seems to be populated by 20 people and a dog all of whom seem to believe that their sole viewpoints are right and any flaws are simply because the person posting the question doesn't understand it I hope you don't mind if I destroy the idea here instead.

But I will give a clue as to the only question that HMRC will care about...

Show me how in the grand FLC plan it solves this issue:-

A legal company hires two lawyers in 2015-16 who do the same job and work on the same cases.
The company pays the lawyers gross payments of £70,000 per year.
Jo works as a direct employee. The company deducts income tax and employee NICs from her salary and pays
employer NICs on top. The total tax and NICs paid on Jo’s salary is £30,612 (£22,071 by Jo and £8,541 by the
company).
Ben works through a PSC and does not operate IR35. He pays himself the most tax advantageous remuneration
strategy combining a low salary and dividends. His total tax and NICs liability is £16,900.

Hint HMRC won't accept the answer the example is unfair because of xyz because they also provide example 2 which dealt with employers NI differently...

So as you can guess I'm less impressed with the idea now then I was when it reappeared earlier this week... And that was before I reread at Andy's posting from the 7th. It seems fine for IPSE people to post half reported second hand comments yet its a problem when others do the exact same thing... But that means I will merely carefully destroy the FLC concept here and via some of the other people I'm working with instead...

[eek]

Oh and finally. An FLC will supposedly give you IR35 certainty for 3 years...

Given that it can take HMRC 3 years to make a decision how does that work and why if/ when HMRC finally decides that lawyer Ben's FLC company has been using an FLC to abuse his position should HMRC not be allowed to ask for the money they believe is rightfully due to them.....

Exactly how many CCC members actually understood this when they said they didn't like it instead of saying have you collectively lost your marbles...

[eek]

Now you may think I'm being utterly unfair on the concept and I should give it a chance but I'm sorry, I can't...

HMG, the unions and the press all believe there are multiple different abuses in the system that need to be addressed. HMRC have been set the task of solving them (and as a side effect get more tax in) or someone has asked HMRC to get more tax in and some has decided to use those problems to resolve it...

Some of us are looking at the big picture, breaking down the issues into the actual problems, collecting empirical evidence and discussing ideas across multiple viewpoints to try and identify a usable approach that can be easily sold. Especially when variations of it will be presented by various different parties with very different viewpoints as a possible solution.

Others seem to view the proposals as an attack on them personally but as they are so special and important to the economy that they can invent their own legal entity type (the FLC) and the government will create it for them.

Now do you really think the look at us we are special approach is going to get very far when it doesn't answer any of the questions HMG wants fixed even before you follow it up with and here is a whole lot of extra work we want you to do because well we are special and important....

[SueEllen]

Just to make those who don't frequent the IPSE forums aware, there were two posts last night which look to address some of the frequently asked questions about the FLC which can be found here.

I would urge you to read them, particularly if you haven't responded to the survey yet.

Why would inventing another corporate entity help us?

Answer it wouldn't like the mess with the opt-out.

The corporate entity would be forced upon us even when our businesses don't suit the structure.

IPSE seem to be flogging something for the sake of it when it hasn't been asked for by members. They would be better of working with a large union to stop low paid workers being forced into false self-employment.

Also as I stated before the survey is written to produce biased results. I guess you used the same survey makers as the Heathrow campaign and my local council....

[eek]

They would be better of working with a large union to stop low paid workers being forced into false self-employment.

I've continually suggested that for years on the outside especially after they refocussing as a catch all group. IPSE didn't however seem to grasp the concept that there are people are may not actually want to be self-employed as being rich, clever and self-employed by choice the idea that people may not be self-employed by choice is impossible to comprehend...

But on your second point the unions have grasped the fact that these rules (especially knocked down to just SDorC which HMRC always win with) they should be able to stop a fair bit of bogus self-employment. IPSE claim that my statement in brackets is false but cannot provide any evidence to back up said claim.

The one thing I have found is that the unions are incredibly interested, focussed and willing to collaborate.. Unlike IPSE who seem to have learnt their negotiation and PR skills from Ian Paisley...

[malvolio]

Why would inventing another corporate entity help us?

Answer it wouldn't like the mess with the opt-out.

The corporate entity would be forced upon us even when our businesses don't suit the structure.

IPSE seem to be flogging something for the sake of it when it hasn't been asked for by members. They would be better of working with a large union to stop low paid workers being forced into false self-employment.

Also as I stated before the survey is written to produce biased results. I guess you used the same survey makers as the Heathrow campaign and my local council....

Perhaps understand the reasoning before you decide it's all wrong? Just a thought...

For one thing, and something I haven't seen much of in this thread, we have to understand that the way we currently get paid and claim expenses through OurCo or through brollies stops in 2016. Left to its own devices HMRC will be taxing all workers at the same level by 2017 on the assumption they are either employees or should be employees. I won't be working by then so I don't care, but those that are still in the game need to wake up. Your only defence is to prove that you are running a business and aren't an Office Angels temp.

Good luck with that...

[TheFaQQer]

Given that the community IPSE forum seems to be populated by 20 people and a dog all of whom seem to believe that their sole viewpoints are right and any flaws are simply because the person posting the question doesn't understand it I hope you don't mind if I destroy the idea here instead.

I don't mind, but I do think you'd be better posting on the IPSE forums where the board and SMT read every post and do take on board what is being said.

Whilst it has been stressed that there are some good points being made outside the IPSE forums, the only place you are guaranteed that your voice on this is heard is over there.