Help with dividends (VERY WORRIED)

[LoanCharged]

Hi guys,

I have a limited company which was set up in the UK but by these services: browningcontractorservices.com they call themselves BCSL (Browning Contactor Services).
Thanks.

Sympathies but now you know at least. Pity you didn’t spot the below on their Standard Terms page before you signed up.:

Information About Us

www.browningcontractorservices.comis a Website operated by BCSL Browning Contractor Services (CY) Limited, registered in Cyprus with registered number HE364581, with registered office address at 75 Prodromou Avenue, 1stFloor, 2063 Nicosia, Cyprus (“we”, “us”, “our”).

[dammit chloe]

To end up with just 70ish% net retention, when only paying a few% tax on a small salary, I'm guessing the promoter must have been creaming off a shed load of fees?

Exactly. This was a long time ago ( 15 years ) so returns were actually approx 80% on Ltd then, so the difference smaller. However, the point is had I chosen Ltd Co route the difference would have been tiny. So no real tax avoidance incentive between those two options. Wasn't a high earner either, just hated admin and tax issues having been PAYE for prior 15 years.

Obviously, had I gone inside IR35 - which almost no one did, then that is different.

[DeludedKitten]

What company do you own shares in that pays dividends? Are there other shareholders in the company?

From what I've read, is this the structure / process:

1) Your company invoices the client
2) Client pays your company for the work completed
3) BCSL invoices you the same amount
4) Your company pays BCSL the invoice (no profit in the company, so no corporation tax to pay)
5) BCSL takes their fee
6) BCSL somehow puts the money in a company that you own shares in
7) The company you own shares in declares a dividend
8) The company you own shares in pays your personal account the dividend amount
9) You declare the dividend income on your self assessment tax return and pay tax on that

Have a look at your tax return and check the figures are correct and that the right level of dividend taxation is being deducted as a starter.

[boxingbantz]

Hi guys,

I have a limited company which was set up in the UK but by these services: browningcontractorservices.com they call themselves BCSL (Browning Contactor Services).

Because I have been so focused on delivering on my contract (first time IT contractor) I didn't pay too much attention to their way of work, but as time went by I am starting to feel worried on how they operate.

So basically to describe how I get the dividends transferred to my personal account:

1. My end client pays me in my company business account
2. I raise an invoice to these guys BCSL (Browning Contactor Services) and they pay me the dividends in my personal account. About 73% of the total value of the contract.

The problem is they say they are established in the UK - w ww.browningcontractorservices.com - (and the staff is British - I can tell from the accent when I am on the call with them), but the biggest concern is that they are based in Cyprus actually.

I want to get rid of them as it feels really dodgy but I don't know how to deal with the dividends myself. I am really worried. Has anyone worked with them before? And how do you guys deal with dividends? How much you can retain from the contract value?

Thanks.

You have a right to be worried - sounds like a tax avoidance scheme to me.

Staggered that as a first time contractor you didn't investigate this fully or speak to an accountant.

Good luck!

[Paralytic]

Staggered that as a first time contractor you didn't investigate this fully or speak to an accountant.

I'm not. I think its more likely that first timers would be sucked into these too-good-to-be-true schemes. They'll trust the "professional" from the schema who's telling them its all approved, or another contractor who has already been sucked in.

[dammit chloe]

I'm not. I think its more likely that first timers would be sucked into these too-good-to-be-true schemes. They'll trust the "professional" front the schema who's telling them its all approved, or another contractor who has already been sucked in.

Think that is actually the truth. You need to be in the game a while before you really learn the rules. Otherwise you trust those who you are led to believe you can trust. Like QCs for instance.

[dx4100]

While I am not surprised a first timer would fall for this I do find it mind boggling they do...

I realised when I went contracting I was entering a new world where I wouldn’t have protections and I was going to have to learn a whole new world. One of the first things I did was sign up here to talk to people before making the final plung. It’s only then I discovered things like IR35 and how dividends work etc.

It really is on yourself to do the research. It’s a more than fool hardy to do what the OP has done.

[Paralytic]

While I am not surprised a first timer would fall for this I do find it mind boggling they do...

I realised when I went contracting I was entering a new world where I wouldn’t have protections and I was going to have to learn a whole new world. One of the first things I did was sign up here to talk to people before making the final plung. It’s only then I discovered things like IR35 and how dividends work etc.

It really is on yourself to do the research. It’s a more than fool hardy to do what the OP has done.

Agree 100%, this is exactly what I did. But, lets be honest, a significant number of contractors are just employees who wanted more cash in their hand and had no interest in learning how to run their own company, so would just accept advice from someone who sounded like they knew what they were talking about (and who told them what they wanted to hear with regards to £££s in their pockets).

[adubya]

While I am not surprised a first timer would fall for this I do find it mind boggling they do...

I realised when I went contracting I was entering a new world where I wouldn’t have protections and I was going to have to learn a whole new world. One of the first things I did was sign up here to talk to people before making the final plung. It’s only then I discovered things like IR35 and how dividends work etc.

It really is on yourself to do the research. It’s a more than fool hardy to do what the OP has done.

Ditto, before I went contracting I was on here for a few years. Absorbed lots of info which made the leap easy and was aware of the scams/pitfalls.

[dammit chloe]

Ditto, before I went contracting I was on here for a few years. Absorbed lots of info which made the leap easy and was aware of the scams/pitfalls.

That I suspect is highly unusual. I was an accidental contractor after being laid off in the dotcom bust. I had no interest before then and would have preferred another permie role but hard to get.