PDA

View Full Version : IR591 question



Mordac
16th January 2004, 13:15
Am I right in thinking that IR591 won't affect PLCs, whatever the circumstances?
If so, what are the implications of setting up an umbrella-type PLC, for contractors to 'buy into', say, thus avoiding any IR591 liabilities.
Is this practical? Can an accountant just set one up, on behalf of a group of contractors?

Simon SJDaccountancy
16th January 2004, 15:29
You could set up a plc - not really too difficult, nor expensive in the long run if we compare to possible tax savings, but if IR591 hits only closed companies, then your logic of a few contractors buying in would work just as well with a Private Ltd Company. That is known as a composite company, and these have been around for ages, so difficult to imagine the Govt not picking this up.

Individually you could look at setting up a plc and possibly avoiding IR591 that way - depends on cost against tax saving. The Govt could of course also include plcs within the IR591 legislation and hit those with 5 or less members.

ChevyChase
16th January 2004, 17:45
...5 family members as "directors"? :)

fiddleabout
16th January 2004, 18:54
It really is flying a kite to dream up solutions to a problem that is not even known yet.

All we have are rumours on what may be done. Until the actuality arrives you can't decide how to bypass it.

I could point you to some offshore schemes which would completely avoid it because they remove the need for a ltd. but there is no way that I can say they will not either be more expensive or clamped down in the budget too until we see it. Clearly Brown learned his lesson well - no years notice this time around.

Whatever happens be certain that all the companies that jumped on the IR35 bandwaggon will be peddling solutions
... and some new ones - I can smell money in this ;)

xoggoth
16th January 2004, 20:27
Really glad I don't have a contract at moment. I did when IR35 came out in a place with lots of other contractors. We talked about IR35 all morning, ways round it, what if you did this?, what if you did that? We talked about at coffe break, we talked about it at lunch we..... aaaagh!!!

ASB
17th January 2004, 12:04
Simon,

Are you categorically stating that a PLC cannot (currently) be a close company ?

silicondale
18th January 2004, 11:42
The Inland Revenue's definition of a close company is here:-

www.inlandrevenue.gov.uk/...tapt11.htm (http://www.inlandrevenue.gov.uk/taxes_act_2000/vol02/icta_pt11/ictapt11.htm)

It makes no mention of whether the company is private (Ltd) or public (plc)

However, the IR5.91 statement said nothing about close companies. It was about "owner managers of small incorporated businesses". Anything beyond what has been publicly stated is pure supposition. I think there are actually quite a few reasons to think that the new measures won't rely on the close company definition - because this would create a whole new set of anomalies. More likely, it seems to me, that it would be more like a super-IR35, deeming market-rate salaries for all 'caught' owner-managers and imposing tax and NIC just like IR35 does. An administrative and legal nightmare - just what the R enjoy.

But that's just my own feeling, based on no evidence at all, because there isn't any. Unless of course ContractorUK can come clean on the identity and reliability of their 'source close to the Treasury' and what that source actually said.

AtW
18th January 2004, 17:31
What are the fundamental implication of being director of a close company? I guess there will be higher scrutiny of the tax affairs? But other than that are there any restrictions that apply to close company but do not apply to non-close company?

FamosAmos
19th January 2004, 12:28
I think you mean the other way around? A PLC (for example) has specific dates that it has to hit for accounts and different audit requirements. As a result a director of that type of company has some different responsibilities. An accountant will give you the best advice.

silicondale
19th January 2004, 12:29
www.taxarticles.co.uk/clo...anies.html (http://www.taxarticles.co.uk/close_companies.html)

zeitghost
19th January 2004, 13:31
Well, that might as well be written in Sanskrit for all the information it imparts.

silicondale
19th January 2004, 17:32
Hi, zeitghost - I think the gist of it is that there's virtually no difference in tax treatment of a simple company whether or not it's a close company. The complications seem to come in when you have the same bunch of people running several companies.

One important thing though - you can't escape being a close company just by registering as a plc - the Ltd / plc status is irrelevant. You can escape it by listing on a stock exchange and having more than 15% of your shares owned by Joe Public. But that costs. And before you think ahah! I can set up my own stock exchange and quote my company there ! - it has to be what they call a 'recognised' stock exchange.

zeitghost
19th January 2004, 17:52
Oh. All right then.

How about Linear B?

sgrollitt
27th January 2004, 12:09
I can't believe there's not more discussion/chat/tittle tattle about IR591.

If it's to replace IR35, then it's very significant in a good way.

If it's to work alongside IR35, then it's very significant in a bad way.

Are we all waiting with baited breath?

I'm very excited and have been catching tench all week my breath is so baited.

MisterGoof
27th January 2004, 12:09
Are you on the Atkins diet.

I've heard that you get bad breath, but to be able to catch fish ....

But seriously, I think the view is that noboddy actually knows so well just wait.

silicondale
28th January 2004, 16:24
sgrollitt - are you sure that IR591 would be good if it replaces IR35 ? Just because IR35 is bad, doesn't mean they're unable to dream up something much, much worse. The good thing about IR35 is that most small businesses, and even most contractors, are able to escape it. Those that have fought it have won in overwhelming numbers (I forget the exact figures but it's something like 400 won to 1 lost). I fear greatly that IR591, whatever form it takes, will catch us all in the net and will squeeze us all not only harder than IR35 does, but harder than the owner managers of bigger companies (like for example EDS ?).

sgrollitt
29th January 2004, 08:08
Worded as it is at the moment, IR591 will significantly increase my take home pay. Of course, you're right, the IR could spring something nasty and unexpected on us, but I don't think so with Blair's electoral position dipping.

There's so much misinformation everywhere.

Also, why is there no thread about the new flat rate for VAT. If you invoice £5,000 a month, you WILL make about £75. So with IR591 and the new VAT rate (now), from April we'll be sinigng again.

fiddleabout
1st February 2004, 13:16
> Worded as it is at the moment

pray tell us all where this wording is - I was under the impression that it is not yet formalised and the only "wording" is a load of speculation.

On the flat rate VAT front you being an umbrella sort of person won't gain a red cent becaase you are not registered for VAT. On the other hand as I run a Ltd., am registered for VAT, and have signed up for flat rate scheme wef Jan 1 (still waiting acceptance from the VAT man though) stand to gain about £800 a year by my calculations.

Brolly = employee = wage slave = no bunce from our enterprise loving chancellor. I've been banging on about the advantages of Ltd. over brolly for ages - how much money must the brolly brigade waste before realising they could do a lot better. Keep on filing your dodgy expenses and waiting for Hector to come knocking.

AtW
2nd February 2004, 10:04
Budget is early this year - 17 March 2004, so we will know it all in a few more weeks, my gut feeling that its going to have immediate effect.