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rootsnall
8th December 2004, 16:44
I am just considering shutting down my Ltd Co and going the umbrella route and wondered what the best option expense wise was ? The previous umbrella I used was OK but didnt seem to have as many IR agreed expenses as some of the others I have investigated.

The one I'm interested in is an agreed per diem overnight rate to cover staying in hotels, I have heard of some quite generous ones that can bump up your expenses significantly.

Buckstewerbuck
9th December 2004, 10:57
if you had a Ltd company, I would assume that your contract was IR35 not caught. If thats the case then stay Ltd Company, and go dividend route.

If your contract is IR35 caught...then only explore the best umbrella.

malvolio
9th December 2004, 11:20
Ignore what the Umbrella(s) tell you - their 'dispensation' covers their accounting practices, not what you can claim from them or the end client. They may have their own policy on allowable unreceipted expenses, but that will be for trivia like lunch and bus fares, not hotels.

What you can claim is money you have spent - if you stay in a hotel overnight and they give you a bill the next morning, that's what you claim (you might like to delete the porn movies and booze, but that's up to you).

If you claim more than you have spent, that's illegal.

If you can't produce VAT receipts to support your claims when asked, that's illegal.

Legitimate business expenses (apart from training, grrr...) are still claimable whether you're inside IR35 or not.

Clear?

ASB
9th December 2004, 12:05
Strictly you do not need receipts - and they certainly don't need to be VAT receipts.

However, what you do need to be able to do is prove the expenditure - and the receipt is a common way of doing that.

Some of the umbrellas are seemingly guilty of misinformation.

As you say, the basic rule is "if you ain't spent it you can't claim it"

bam70049
9th December 2004, 15:08
I closed down my limited company- too much hassle - and went with an umbrella. I use Parasol IT and they allow Accommodation and breakfast costs up to £95 per night for London and £75 Elsewhere. Receipts are required. You can also claim up to £45 per night for accommodation without submitting receipts but you may be asked to provide these receipts to substantiate your claim.

malvolio
9th December 2004, 15:26
"..up to.."

Certain of the umbrella fraternity seem to imply that you can claim the high value without having spent the money. Of course, we all know that's illegal and only a complete fool would believe that was what they meant... Oh, I see..:D

Bradley
9th December 2004, 16:45
Certain of the umbrella fraternity seem to imply that you can claim the high value without having spent the money
The "professionals" that allow this to happen are just as guilty of tax evasion as their clients.

Ever since the money laundering regulations came into force for qualified accountants this year it is now their duty to report to the national criminal intelligence service those clients who they suspect are claiming more than they are spending. "Suspicion" is defined as what a reasonable person would take to go to the police. There doesn't have to be physical evidence of a crime being committed.

malvolio
9th December 2004, 17:03
>>>The above Net Monthly Salary is how much you could potentially net as a Penury3 employee.*Based on an employee utilising Penury3's Inland Revenue approved expense policy. <<<

There are a lot of other similar references on the website and the clear inference (if not the actual reality - note the use of the word "potentially") is that Penury3 has a way of cheating the expenses rules. Which they haven't, of course, but we're back to fools seeing what they want to see again.

planetit
9th December 2004, 17:30
I find the mentality of people who use umbrella companies amazing. They hand over all their money to another company, and then submit themselves to that company’s rules about what they do with the money.

It’s your money!

The only rules you have to comply with are those set by law and the Inland Revenue. If you want to claim £100 a night for a hotel room, then go ahead.

Must be the permie mentality.

bam70049
9th December 2004, 18:24
The reason thousands of us use umbrellas is to get rid of the administrative burden when using accountants and allows us to concentrate on doing our job.
I use an umbrella because I can fax a timesheet to the agency on the monday and the money is in my bank account the following monday.

Robot
9th December 2004, 18:39
What is the difference between a dispensation and claiming scale rate payments?

If an Umbrella Company has a dispensation fair enough, no need to show anything on the P11d, but surely the scale rate payment thingy is different…..No?

partimer
9th December 2004, 18:42
If people want to use brollies then that's fine.
What I find amazing is the number who claim bogus expenses and then switch contracts (and brolly) and start claiming yet more bogus expenses at the new brolly.

The idea being that the IR will never bother chasing the ex-employee of the brolly.
I find that dishonest (as well as what other people have already stated above) but what are the chances of them being caught ?

That's why some people use a brolly (not all mind you !).
I've met several brolly users who did that and they basically pay no tax since they got the full allowance every week (tax free) which more than off set the outgoing fees.

bam70049
10th December 2004, 10:13
RE: I've met several brolly users who did that and they basically pay no tax since they got the full allowance every week (tax free) which more than off set the outgoing fees.

A good reason to use a brolly then?
If they can get away with it then good luck to them!

mailmannz
10th December 2004, 11:49
The reason thousands of us use umbrellas is to get rid of the administrative burden when using accountants and allows us to concentrate on doing our job.

I use an umbrella because I can fax a timesheet to the agency on the monday and the money is in my bank account the following monday.

And how is that different from what Im doing now under my own company?

Ive finally seen the light and dont see any point in paying other people monthly fee's for me to get my money.

Mailman

bam70049
10th December 2004, 13:02
I do not need to worry about VAT inspections , IR35 investigations, PAYE compliance reviews, VAT returns, companies house, Corporation Tax,P11D forms,S660A, company accounts, trying to understand company accounts, company bank accounts, setting aside money for tax, accountants fee, PEI and EPL insurance (all included with the brolly), complicated tax return ...............etc.

Re: Ive finally seen the light and dont see any point in paying other people monthly fee's for me to get my money.

Do you not pay for an accountant?
And its not your money its the company's - in the company's bank account- need to access it by dividends, directors loans and then keep some aside for future tax etc. whereas my money is in my bank account straight away to do as I please.

In the recent PBR - Small companies, the self-employed and the tax system: a discussion paper it seems Gordon Brown intends to have you paying NI on dividends anyway.

mailmannz
10th December 2004, 13:23
So what does it cost to be part of a brolly? I doubt they do it for love.

Mailman

bam70049
10th December 2004, 13:34
I pay £14.95 each week or if you are paid monthly its £44.95.

malvolio
10th December 2004, 13:41
...but let's wait and see how long the brolly conept survives the PBR's stated intetnion about "right amount of tax". It may not yet be aimed at brollies (at least, not the sensible ones - some schemes deserve all they get!)

But I'm not going to bet that at some point soon you will be paying exactly the same NICs and PAYE as an employed person on the same gross salary - as well as the brolly's fees, and your training costs of course. It would be hard to defend the brolly approach as being nothing more than a tax avoidance exercise. At least the LtdCo has a starting point for the argument.

As always, it's a personal assessment of percieved business risk. We all make our own decisions - the trick is making the right one!

bam70049
10th December 2004, 14:35
Its not the brollies he's after - this is from the news section

Gordon Brown has come under fire from advisors and accountants over plans to cut tax incentives for limited liability companies.

The Chancellor is expected to abolish the traditionally less onerous tax regime for micro-businesses because he needs to address a £34.2 billion funding shortfall.

According to the Times, the plan is likely to mean a hike for limited company owners in their NI contributions, so the tax treatment of limited liability owners can be better aligned with employees and the self-employed.

Also its up to the individual to choose what suits him best ltd co , brolly etc.
In my example I am part of that highly skilled flexible workforce ( travel 300 miles stay in hotels etc. ) Gordon Brown supports but sees as a cash cow to pay for the really important wealth creation public service jobs eg. 'School Condom Coordinator' or 'Teenage Pregnancy Advisor'

With all this uncertainty S660A for example I've plumped for a brolly ( sensible one) but others will prefer ltd company.
You pay your money and take your choice

partimer
10th December 2004, 14:51
>A good reason to use a brolly then?

No.
The difference between tax avoidance and tax evasion is the thickness of a prison wall. Claiming bogus expenses is no different then not getting caught whilst you burgle somebody's property. You may get away with it but it's still wrong.

Agree with Malvolio.
The Clown will be after more tax to prop up the 35 billion deficit. I'll be surprised if we all (brolly + Ltd) don't get hammered in some way. Some brollies are just so blatant at selling their services as tax avoidance but it is in fact tax evasion.

malvolio
10th December 2004, 14:52
I meant the one that Dawn came up with about addressing tax avoidance schemes by changes to the law (erm, isn't avoidance legal, BTW?) and having the right to backdate any such changes to the date of that announcement - the day after the PBR, although it wasn't announced anywhere, merely published as a statement on Hector's website.

In other words, "we will close all such avenues effective now, it might just take a while to get round to your variant".

Or, and this is what's stirred up the legal people, "we can change the law in x years so that your present fully legal scheme becomes illegal and we can back charge the missing tax"

Now tell me this is a moderate centralist democracy we're living in.

partimer
10th December 2004, 15:04
>Its not the brollies he's after

Clown is after everybody for more tax. It's just wealth redistribution.
Look at his "baby bond".
Next year every baby born after Sept 2002 will get 250 quid (500 quid if you are "poor").

Now why should I pay extra tax to encourage single mothers who want to become like the Rochdale Swamp Donkey ?

>"we can change the law in x years so that your present fully legal scheme
>becomes illegal and we can back charge the missing tax"

Yes a very scary bit, backdating tax laws. Just think they could then sue Queen Vitoria for not having her tax in order (daft example but you get my drift).

I doubt if they could do this in statuory law since none of us can go back in time to alter our tax affairs and hence could not stand up in a court of law (unless Liebore remove that court of law for future tax cases).

Bradley
10th December 2004, 16:44
Its not the brollies he's after
Sluggo will go after the softest target that will give the biggest reward. I'd be amazed if brollies weren't heavily targeted by the new NIC avoidance unit (wasn't there something like that in 1984?)

The retrospective stuff in the PBR just gives him licence to collect it whenever he needs it or feels he can get away with it. After all, New Labour like to have control over when bad news appears.

Bradley
20th December 2004, 13:22
To qualify for travel and subsistence expenses you have to attend a "temporary" workplace. It seems from the following that quite a few working through a succession of umbrella companies won't be able to claim travel etc expenses from now on - if you agree with the Revenue that is.


If the worker has an ongoing or over-arching contract of employment covering all the assignments that he or she undertakes for the [umbrella], it may well be that none of those assignments will last, nor be expected to last, for all or almost all of the period for which the employee holds the over-arching employment. In that case the fixed term appointment rule will not apply. If the employee spends less than 24 months at each site each one will be a temporary workplace – assuming of course that the basic "task of limited duration/other temporary purpose" test is met.
However the effect of the "reasonable to assume" test should not be overlooked. An individual may have a history of moving from one [umbrella] to another [umbrella], undertaking just one assignment for each company. In the absence of evidence to the contrary it would be reasonable to assume that that pattern will continue. Each new employment/assignment would then be regarded as a permanent workplace unless and until it could be shown that, on a particular occasion, the employee would in fact be moving on to a second or subsequent assignment with the same employer.
Also, an individual may expect, when he takes up the employment with the [umbrella], that the assignment on which he is working will be his only one – because, for instance, he is filling in time between permanent assignments, or he is returning to an overseas country. In these cases the individual would not have a temporary place of work and his travel and subsistence expenses will be fully taxable and subject to NICs.

Vetran
20th December 2004, 17:26
or he is returning to an overseas country. In these cases the individual would not have a temporary place of work and his travel and subsistence expenses will be fully taxable and subject to NICs.

interesting

rootsnall
20th December 2004, 18:02
Thanks for the replies. I think my current decision is to stick with the Ltd Co but pay myself only those expenses I incur and start paying myself everything left as PAYE and dont issue anymore dividends. Throroughly defeated by Gordon and the IR but hopefully making my sleep a little more restful. By sticking with the Ltd Co route I think I retain a little more control over my finances and the invoicing process with little extra effort and a monthly cost only slightly higher than the cheapest umbrella. Some of the umbrellas I contacted were asking for ridiculous cuts, 6% !!!

mailmannz
20th December 2004, 18:04
Aye feck it man...keep paying yourself dividends as its not quite illegal just yet.

Mailman