One for the 90% take home pay crowd

[PermMCCon]

Guys,

Going back to the original question on this thread;

- I went on a course a couple of years ago with a number of other contractors
- At lunch on the second day, one of them started moaning about an HMRC investigation on him
- We were supportive of him, felt bad for the guy until...
- He explained he had joined one of those "keep 85-90% of your rate" for a few years
- Instantly all of us asked him "what the hell did you expect to happen!?!". HMRC apparently has automated recon systems looking for Ltd companies who do exactly that.

We basically all agreed that it is dumb and not really fair to the rest of us for people to try and play the system like that

- He confirmed that he had a tax bill coming his way of nearly £80k...

A good lesson for all of us.

I wouldn't touch those "keep 90%" deals as they are not fair to the UK or us. I don't think we as small Ltd Companies get that bad a deal and going for one of these smacks of greed to me. We can try and call it "tax efficient" or whatever, but it doesnt pass the "does this feel right?" check...

[WordIsBond]

I wouldn't touch those "keep 90%" deals as they are not fair to the UK or us. I don't think we as small Ltd Companies get that bad a deal and going for one of these smacks of greed to me.

Exactly.

[Alan @ BroomeAffinity]

The t&s relief and divi tax plans that are going through at the moment are going to tempt a lot of contractors away from limited co into these schemes. As well hung for a sheep as a lamb.

[BrilloPad]

Guys,

Going back to the original question on this thread;

- I went on a course a couple of years ago with a number of other contractors
- At lunch on the second day, one of them started moaning about an HMRC investigation on him
- We were supportive of him, felt bad for the guy until...
- He explained he had joined one of those "keep 85-90% of your rate" for a few years
- Instantly all of us asked him "what the hell did you expect to happen!?!". HMRC apparently has automated recon systems looking for Ltd companies who do exactly that.

We basically all agreed that it is dumb and not really fair to the rest of us for people to try and play the system like that

- He confirmed that he had a tax bill coming his way of nearly £80k...

A good lesson for all of us.

I wouldn't touch those "keep 90%" deals as they are not fair to the UK or us. I don't think we as small Ltd Companies get that bad a deal and going for one of these smacks of greed to me. We can try and call it "tax efficient" or whatever, but it doesnt pass the "does this feel right?" check...

So you all decide what is fair and what is not?

Personally I leave fair up to the courts. If the scheme works then fine. If not then fine. Certainly he should not be surprised that HMRC are investigating.

So when will you fight HMRC? When HMRC decide that all contractors are within IR35? When they use APNs to presume guilt? When they take the money directly from bank accounts?

HMRC could go after the big companies using tax schemes. Close loopholes. Instead they go after the who cannot defend themselves. Using bullying. And you support them.

Nice....

[Fred Bloggs]

The t&s relief and divi tax plans that are going through at the moment are going to tempt a lot of contractors away from limited co into these schemes. As well hung for a sheep as a lamb.

Agreed, the providers are on a feeding frenzy just now judging by the number of emails I get lately about so called "fully compliant keep up to 90%" schemes.

[centurian]

Tax avoidance, even aggressive tax avoidance is legal and remains legal. If you use a tax avoidance vehicle you won't be prosecuted for tax evasion, you do not risk a criminal record.

Some tax avoidance works in the eyes of the courts, with regard to the legislation. Some tax avoidance doesn't work - it rests on an interpretation that the courts don't agree with, or is scuppered by (retrospective!) legislation. If yours doesn't work, then you have to pay the tax you owe + interest + penalties. ISA is tax avoidance that does work.

As good a definition as I have seen.

But I still cannot square the statements of "tax avoidance that does not work" and "tax avoidance is legal" - I appreciate these are not your statements.

If it's legal, you shouldn't have to pay a penny extra. If it doesn't work, then it must break some law somewhere - there has to be a law which says you must pay the money - and you are in breach of that law - perhaps not to a criminal level, but it's still a law which is being broken.

The "tax avoidance is legal" banner does annoy me in that it assumes and conveys that whenever a provider advertises a "tax avoidance" scheme, it must automatically be legal, simply because the provider says it is - and HMRC are overstepping their authority in daring to question the arrangements.

[TykeMerc]

Fair points Centurian and I agree with your post, but the crucial difference is whether an approach can be proven to bend a rule past the point where it could almost be termed evasion.

With the way the avoidance word has been abused, demonised and corrupted we could actually do with another word to avoid the connotations. There are some every day non aggressive avoidances like pension contributions and ISA's and the other extremes such as the lunatic schemes based around grossly artificial structures.

[Fred Bloggs]

The waters here are further muddied by so called "Brollies" who insist to potential clients that they are not using tax avoidance, do not need a DOTAS declaration and are fully compliant with all UK legislation. I can understand users being attracted by such claims. They sound very credible.