Restructure of Ltd in face of budget changes

[northernladuk]

If it was anyone else I'd say the same, but this guy is an experienced contractor - been in the game 10+ years and generally on most matters I'd trust his opinion.
Hence my query here - it doesn't sound right to me, but on the other hand I find it hard to believe as a seasoned contractor he would fall for a scam.

He may genuinely believe he's beaten HMRC and has a fool proof method. Thing is it might be now but with retrospective taxation and penalties it's going to unravel hard and fast.

Just because people have 10+ years it doesn't mean they aren't gullible idiots. PC has been contracting for over 10 years hasn't he? Should we trust him?

[northernladuk]

And have a look at this thread as well...

http://forums.contractoruk.com/hmrc-...ml#post2228321

[DaveB]

Playing devils advocate for a second.

If you are contracting in the public sector you could use one of these schemes to sidestep the new PSC rules and get paid as before without being caught under PAYE etc.

Put the difference in tax you would have paid against what you pay through the scheme in a CTD and the only downside is the scheme providers fees.

If/When HMRC come calling you have the cash to pay the tax bill. If they never come calling you get the CTD cash back.

Just a thought.

[northernladuk]

Playing devils advocate for a second.

If you are contracting in the public sector you could use one of these schemes to sidestep the new PSC rules and get paid as before without being caught under PAYE etc.

Put the difference in tax you would have paid against what you pay through the scheme in a CTD and the only downside is the scheme providers fees.

If/When HMRC come calling you have the cash to pay the tax bill. If they never come calling you get the CTD cash back.

Just a thought.

Why not just turn down the gig in the PS and go get another one that means you won't have to sleep with one eye open for the next 6 years?

[DaveB]

Why not just turn down the gig in the PS and go get another one that means you won't have to sleep with one eye open for the next 6 years?

I did say I was playing devils advocate.

If the tax that could be owed is in a CTD then you won't have to lose any sleep over it anyway. CTD means no interest or penalties when the bill turns up provided you took it out before the tax liability payment was due.

[Pondlife]

I did say I was playing devils advocate.

If the tax that could be owed is in a CTD then you won't have to lose any sleep over it anyway. CTD means no interest or penalties when the bill turns up provided you took it out before the tax liability payment was due.

Wouldn't the existence of the CTD mean someone's going to start prodding about in your bins?

It's hypothetical I know.

[SimonMac]

Playing devils advocate for a second.

If you are contracting in the public sector you could use one of these schemes to sidestep the new PSC rules and get paid as before without being caught under PAYE etc.

Put the difference in tax you would have paid against what you pay through the scheme in a CTD and the only downside is the scheme providers fees.

If/When HMRC come calling you have the cash to pay the tax bill. If they never come calling you get the CTD cash back.

Just a thought.

What about penalties and interest, what is a CTD and why do they not apply

[DaveB]

What about penalties and interest, what is a CTD and why do they not apply

Certificate of Tax Deposit.

Essentially you deposit cash with HMRC against future tax liabilities but unlike a payment on account you retain control of the cash and have access to it. If a tax bill turns up you can then use the CTD to pay it. If the CTD was taken out before the tax was deemed to be due then it is regarded as having been paid on time and no interest etc is applied.

After 6 years, or whatever the time limit is, if HMRC haven't challenged your arrangements and have run out of time to do so you can cash in the CTD and get your money back, potentially with interest.

[jamesbrown]

generally on most matters I'd trust his opinion

Is that because your "mate" is a figment of your scheme-promoting imagination?

[Felix22]

Is that because your "mate" is a figment of your scheme-promoting imagination?

No. I'm not promoting a scheme, I've just never come across this before - been happily working thru Ltd for 5 years and it was only when I happened to mention I'd be optimising my dividends for this tax year due to the budget that he mentioned his new set up.