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Moumunne
29th July 2017, 18:36
Can someone explain, why is it that you can take home 85% contracted by umbrella under ir35 ?

Outside ir35 working for your own LTD you used to pay 22% after expenses. So it doesn't make sense. At the end seems like you are actually paying less in taxes. :(

BrilloPad
29th July 2017, 18:39
Which umbrella is this? Does it assume the hourly rate is mimimum wage?

You should be very wary.

http://forums.contractoruk.com/hmrc-scheme-enquiries/106940-tempted-join-new-contractor-scheme-ask-following.html

northernladuk
29th July 2017, 18:54
You can't. Run away. Plenty of threads on it on here and a whole section dedicated to those caught up in it.

Moumunne
29th July 2017, 19:09
I don't know. I have couple of Colleagues, Locum doctors getting payed through umbrella. They are taking home exactly 85%. They couldn't explain except it was mention something about an annuity fund.

northernladuk
29th July 2017, 19:27
Tell them to come on here and read the thread linked and then HMRC investigation part of these forums.

SueEllen
29th July 2017, 19:28
I don't know. I have couple of Colleagues, Locum doctors getting payed through umbrella. They are taking home exactly 85%. They couldn't explain except it was mention something about an annuity fund.

First have a look at this forum - linky (http://forums.contractoruk.com/hmrc-scheme-enquiries/). Make sure you read a few threads.

Then ask the "umbrella" how do the "umbrella" give you 85% take home?

If they cannot give a simple explanation that you can understand then they are talking about tax evasion not avoidance.

BTW we could help you more if you named the umbrella.

Moumunne
29th July 2017, 19:53
I will ask the name of the umbrella.

Thank you for all your answers.

SeanT
29th July 2017, 21:25
If it sounds too good to be true...

eek
30th July 2017, 08:17
If it sounds too good to be true it is.

Scam umbrellas pray on people’s lack of understanding and greed. The end result will be a very large bill from Hmrc and given the current methods being used permanent damage or your pension.

Apart from that my current viewpoint is that it’s now greed winning rather than fear (as was the case in the very early days of ir35) so it’s self inflicted no sympathy.

BrilloPad
30th July 2017, 14:49
I don't know. I have couple of Colleagues, Locum doctors getting payed through umbrella. They are taking home exactly 85%. They couldn't explain except it was mention something about an annuity fund.

If they are doctors they need to be struck off. Are they really that stupid?

cojak
30th July 2017, 15:23
If it sounds too good to be true it is.

Scam umbrellas pray on people’s lack of understanding and greed. The end result will be a very large bill from Hmrc and given the current methods being used permanent damage or your pension.

Apart from that my current viewpoint is that it’s now greed winning rather than fear (as was the case in the very early days of ir35) so it’s self inflicted no sympathy.

Completely agree with this.

SueEllen
30th July 2017, 17:38
If they are doctors they need to be struck off. Are they really that stupid?

Why do you think just because people are intelligent in one area they are not stupid in others?

Moumunne
30th July 2017, 23:08
Hey BrilloPad stop being rude. Are you stupid because you don't know how to save someone's life?
Is there an admin or mediator here?
Are people allowed to make such comments?

Please I need help and support. That comment was completely out of line.

northernladuk
30th July 2017, 23:41
Hey BrilloPad stop being rude. Are you stupid because you don't know how to save someone's life?
Is there an admin or mediator here?
Are people allowed to make such comments?

Please I need help and support. That comment was completely out of line.

It's a moderator and one has actually posted 3 posts up so guess they aren't that bothered. Although it's pretty well moderated in these sections it's still not cotton wool land. It's an internet forum after all. Gotta grow some and just ignore anything you that annoys you.

If you really want to you can hit the star at the bottom and report the post but if admin and the mods think you are bed wetting you might get in to more bother.

You've had your answer, your colleagues are in a lot of bother and you do well to avoid these companies. That is all you really need to know.

cojak
31st July 2017, 05:45
If they take this up they aren't stupid, just greedy and we will have no sympathy if and when HMRC catch up with them.

In the meantime tell them to fill their boots, because they'll take no notice of you if you say otherwise

And the same applies to you.

(Oh, and no - we aren't too bothered.)

NotAllThere
31st July 2017, 06:01
It's a moderator and one has actually posted 3 posts up so guess they aren't that bothered.BP's stupid comment got slapped down effectively by other members; it seems enough.

@Moumunne - in the professional areas, things are usually kept fairly professional. We've been dealing with 85% pay for years now, and many members of this site have been caught out by it. BP being one, ironically.


Why do you think just because people are intelligent in one area they are not stupid in others?I did know one practice that offered (and actually promoted) homeopathy.

Plenty of people don't get tax or finance. I stopped studying biology when I was 13. So I sensibly outsource my medical care to people who are qualified. In the same way, IT professionals, doctors, footballers etc. outsource their financial matters. Trouble is, with outsourcing finance, any action you take on that advice, no matter how bad or downright dangerous it is, is your responsibity. The sharks get their fee and no action is taken against them. (In my view, the QC's who give their positive opinion on these schemes are the ones who should be struck off). I understand the UK government is considering make the sharks bear some responsibility, but give the incompetence of the current shower, I wouldn't hold my breath.

Fred Bloggs
31st July 2017, 06:01
If they take this up they aren't stupid, just greedy and we will have no sympathy if and when HMRC catch up with them.

In the meantime tell them to fill their boots, because they'll take no notice of you if you say otherwise

And the same applies to you.

(Oh, and no - we aren't too bothered.)
I echo cojak's points here. But I at least give the OP some credit for smelling something rotten and coming here for advice. I think he/she is to be commended for doing so but at the same time if he/she was thinking of doing similar, then they have had a lucky escape.

For the avoidance of doubt, OP, your friends are not in fact employed by an umbrella company. They are involved in a tax avoidance/evasion scheme and they will be come down on very hard indeed by HMRC. It's not like there haven't been enough warnings about this. In your shoes, I would try very hard to get them to look at this thread and make a voluntary disclosure to HMRC. That way, they are at least trying to limit the ultimate damage. HTH.

BrilloPad
31st July 2017, 07:14
Hey BrilloPad stop being rude. Are you stupid because you don't know how to save someone's life?
Is there an admin or mediator here?
Are people allowed to make such comments?

Please I need help and support. That comment was completely out of line.

Beyond the scope of professional forums. Try here: -
http://forums.contractoruk.com/general/123036-pm-fao-moumunne.html#post2452136

In theory mods should have moved your comments to general. However they are lazy.

HTH BISDI

cojak
31st July 2017, 07:39
The mods should not have moved this post BP, you are being provocative.

If the OP wants a straightforward answer to his post however, he should read this thread:

Choosing a legitimate umbrella (http://forums.contractoruk.com/public-sector-ir35/118859-ps-ir35-choosing-legitimate-umbrella.html)

SueEllen
31st July 2017, 08:09
@NotAllThere The question was actually for Brillopad to answer as other people aren't as socially inept/unaware as him.

@Brillopad next time you make a comment like that I may be tempted to get really nasty and personal.

BrilloPad
31st July 2017, 10:14
@NotAllThere The question was actually for Brillopad to answer as other people aren't as socially inept/unaware as him.

@Brillopad next time you make a comment like that I may be tempted to get really nasty and personal.

I did answer it. In the correct place. General.

http://forums.contractoruk.com/general/123036-pm-fao-moumunne.html#post2452136

HTH BISDI

piebaps
1st August 2017, 16:51
There's an annuity based thread here http://forums.contractoruk.com/hmrc-scheme-enquiries/117124-another-tax-avoidance-scheme-annuity-2.html Is this the same lot OP?

BrilloPad
1st August 2017, 17:42
There's an annuity based thread here http://forums.contractoruk.com/hmrc-scheme-enquiries/117124-another-tax-avoidance-scheme-annuity-2.html Is this the same lot OP?

I expect there are several companies hawking this snake oil. I tried reporting one to the HMRC fraud line. They never came back to me. They seem quite happy to let these schemes roll then take draconian measures.

Moumunne
1st August 2017, 20:37
This what I've found so far:
''You'' are umbrella's employ and ''you'' take home minimum wage.
The rest of the money, they are going into an annuity found.
Apparently someone had called HMRC and said it is legal until 2019

I don't work for the public sector and I've kept my LTD.
I've tried to found out the name of the umbrella and the colleague I've spoken with, he's been reluctant to give away the name. He said it was the recruiting agency who's proposed this umbrella. The agency is Medacs

BrilloPad
1st August 2017, 20:42
This what I've found so far:
''You'' are umbrella's employ and ''you'' take home minimum wage.
The rest of the money, they are going into an annuity found.
Apparently someone had called HMRC and said it is legal until 2019

I don't work for the public sector and I've kept my LTD.
I've tried to found out the name of the umbrella and the colleague I've spoken with, he's been reluctant to give away the name. He said it was the recruiting agency who's proposed this umbrella. The agency is Medacs

Lets just say that someone has called HMRC(which I doubt) and HMRC say it is legal(impossible). In 2019 HMRC will deem all the "annuity" as a loan. There will then be many years of pain, misery and suffering.

Have a look at the De Graaf thread earlier on today. Though that is one of just hundreds of examples.

Recently I reported one of these schemes to HMRC. They don't seem to care. They seem happy to let people accrue lots of surcharges/fees/penalties.

eek
2nd August 2017, 10:53
This what I've found so far:
''You'' are umbrella's employ and ''you'' take home minimum wage.
The rest of the money, they are going into an annuity found.
Apparently someone had called HMRC and said it is legal until 2019


Not quite true. Come 2019 HMRC will treat all income paid into that annuity as income within the year 2019-20 and tax you on it. So yes its legal but HMRC probably aren't revealing the full picture to those people as they are answering just question being asked. And HMRC know that they are going to get the money anyway so see little harm in providing tax evaders just the information they ask for nothing more



I don't work for the public sector and I've kept my LTD.
I've tried to found out the name of the umbrella and the colleague I've spoken with, he's been reluctant to give away the name. He said it was the recruiting agency who's proposed this umbrella. The agency is Medacs

Hardly surprising. I wonder what checks Medacs have made beyond £s commission.. That could come back to bite them..

cojak
2nd August 2017, 11:12
Hardly surprising. I wonder what checks Medacs have made beyond £s commission.. That could come back to bite them..

Will Medacs be responsible for the shortfall eek?

And what happens to that shortfall if Medacs subsequently decide to close down?

(Actually thinking about it, if they do have a tax liability they wouldn't be allowed to close down...)

Fred Bloggs
2nd August 2017, 11:53
Will Medacs be responsible for the shortfall eek?

And what happens to that shortfall if Medacs subsequently decide to close down?

(Actually thinking about it, if they do have a tax liability they wouldn't be allowed to close down...)
Makes no odds. The money will already be in Panama. The directors will be anywhere except in the UK.

BrilloPad
2nd August 2017, 11:57
Makes no odds. The money will already be in Panama. The directors will be anywhere except in the UK.

And HMRC will not go after them.....

malvolio
2nd August 2017, 12:09
And HMRC will not go after them.....
Why would they? It's up to you to pay the correct taxes...

Moumunne
2nd August 2017, 17:02
That explains it all. Thank you for all your answers.

BrilloPad
2nd August 2017, 20:49
Why would they? It's up to you to pay the correct taxes...

A discussion for general. However for a drug trade to exist requires pushers and users. I agree with what you say, however I would like to see both ends tackled.

SueEllen
3rd August 2017, 09:13
A discussion for general. However for a drug trade to exist requires pushers and users. I agree with what you say, however I would like to see both ends tackled.

Needs to get more media attention before there is even a chance of HMRC going after the pushers.

Fred Bloggs
3rd August 2017, 09:43
Needs to get more media attention before there is even a chance of HMRC going after the pushers.
I honestly cannot see this ever happening. Each UK individual self assesses and is responsible for paying the correct tax on their worldwide income (with certain exceptions, obv). So, it is not really HMRC's role to act as a policeman in the commercial tax adviser market place. All their spot light announcements are aimed at potential and actual customers of tax advice schemes. There is no way HMRC are going to target scarce resources engaging in a "whack a mole game" where they are guaranteed to always be behind the curve. The emphasis (rightly in my view) is on targeting individuals to make sure they meet their legal obligations (and no more). Obviously, public education is a big part of this and here, CUK serves an invaluable purpose since its search engine results seem amazingly good for topics like this. The community here helps massively too. If education is important, maybe HMRC should make a point of much more high profile campaigns in the media instead of low profile search light bulletins on their website. One very worrying trend though is the abuse of the term "umbrella company". Reputable companies must be sick to death of tax scams calling themselves umbrella companies. How this is tackled, I don't really know.

SenigPAY
4th August 2017, 10:32
Why would they? It's up to you to pay the correct taxes...

True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

malvolio
4th August 2017, 11:13
True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.
Maybe so, but at the end of the day you are personally responsible for paying the correct taxes. Being advised how much is due is fair enough, and so is leaving it to someone else to do the donkey work.

But when the result is a net income much over 75% of your gross after fees paid to your advisor, then alarm bells should be ringing.

That's why HMRC aren't involved. It's not their problem, it's up to you to get proper, accurate advice.

BrilloPad
4th August 2017, 11:20
Maybe so, but at the end of the day you are personally responsible for paying the correct taxes. Being advised how much is due is fair enough, and so is leaving it to someone else to do the donkey work.

But when the result is a net income much over 75% of your gross after fees paid to your advisor, then alarm bells should be ringing.

That's why HMRC aren't involved. It's not their problem, it's up to you to get proper, accurate advice.

I agree with all f that. However I suspect our definition of correct might be different.

Having been stung personally I would like to try to warn as many others as possible.

midlandlass
7th August 2017, 18:08
:facepalm:Take home via a true umbrella is more likely to be in the region of 52-56% for most locums. Anything more and I would, as everyone else has said, run a mile!

piebaps
8th August 2017, 15:26
So, it is not really HMRC's role to act as a policeman in the commercial tax adviser market place. All their spot light announcements are aimed at potential and actual customers of tax advice schemes. There is no way HMRC are going to target scarce resources engaging in a "whack a mole game" where they are guaranteed to always be behind the curve. The emphasis (rightly in my view) is on targeting individuals to make sure they meet their legal obligations (and no more). Obviously, public education is a big part of this and here, CUK serves an invaluable purpose since its search engine results seem amazingly good for topics like this. The community here helps massively too. If education is important, maybe HMRC should make a point of much more high profile campaigns in the media instead of low profile search light bulletins on their website. One very worrying trend though is the abuse of the term "umbrella company". Reputable companies must be sick to death of tax scams calling themselves umbrella companies. How this is tackled, I don't really know.

When there was a run on pension liberation fraud it was taken seriously Pension scams | Action Fraud (http://www.actionfraud.police.uk/fraud-az-pension-liberation-scam)

These scheme promoters are IMHO doing pretty much the same thing. The fraudsters were taking their cut and leaving the unwitting pension members with tax bills in just the same way as the scheme operators are here.

midlandlass
8th August 2017, 18:32
One very worrying trend though is the abuse of the term "umbrella company". Reputable companies must be sick to death of tax scams calling themselves umbrella companies. How this is tackled, I don't really know.

It is frustrating - trying to explain specifically to newbies why they are not true umbrella's is tedious to say the least. :mad:

midlandlass
8th August 2017, 18:34
True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

Unless I am being completely blonde, can you explain what new rules these are? There has been debt transfer in place for some time already :confused:

ASG
14th August 2017, 11:07
True but there are some new rules coming out in September that will mean the recruitment agencies will need to be more careful over the umbrella companies they have 3rd party hire agreements with. Which is great news for the Umbrella companies that play by the rules.

What new rules in September?
Am I missing something?

midlandlass
14th August 2017, 18:35
As of the 30th September 2017, recruitment agencies will need to be 100% confident with the companies they recommend to contractors, as new laws come into force. In an unusual turn the government has suggested that any consultants receiving kick backs for referrals, even not in monetary form, could find themselves caught up and potentially prosecuted for criminal tax evasion if they recommend a tax avoidance scheme.

Take a look at this (http://www.osborneclarke.com/insights/failure-to-prevent-tax-evasion-how-will-the-new-law-affect-recruitment-businesses/) for more details...

cojak
14th August 2017, 18:41
Oh happy days! :D

midlandlass
14th August 2017, 18:44
We can but hope that it puts pay to referrals and helps to push the business in the right direction to compliant brollies! :tired