Under IR35 - Capita is charging me Apprenticeship Levy Tax

[nelsonswork]

I'm a contractor working for a goverment agency and Capita is handling my billing. I've been forced under IR35. Capita is now taking out of my day rate the apprentiship levy tax at .5%. This is only required by companies with a payroll over 3million. My company does not have a payroll of over 3m, So this must be Capitas Tax. Is this even legal to pass on a tax? they say it is a ccs policy that I pay for Capita's tax? I also don't get any of the benefits or rebates.

[northernladyuk]

I'm a contractor working for a goverment agency and Capita is handling my billing. I've been forced under IR35. Capita is now taking out of my day rate the apprentiship levy tax at .5%. This is only required by companies with a payroll over 3million. My company does not have a payroll of over 3m, So this must be Capitas Tax. Is this even legal to pass on a tax? they say it is a ccs policy that I pay for Capita's tax? I also don't get any of the benefits or rebates.

What does your contract say?

[ladymuck]

Capita, as your faux employer, has a turnover that means the levy is chargeable. Whether they pay it, you pay it, or the PSB pays it depends on your contract.

BTW - your post implies you are putting the invoicing/receipts through your Ltd Co. How are you accounting for the VAT discrepancy between what you charge and what you receive? I asked my accountant and he didn't know!

[eek]

First question who is paying you personally... To answer your question we need to know the contract hierarchy:-

public sector client -> Capita -> ???? -> ???? (either your company / umbrella) --> you

only then can we work out what is happening and whether the deduction is valid or not...

[SueEllen]

Why is this thread in General?

[eek]

Capita, as your faux employer, has a turnover that means the levy is chargeable. Whether they pay it, you pay it, or the PSB pays it depends on your contract.

BTW - your post implies you are putting the invoicing/receipts through your Ltd Co. How are you accounting for the VAT discrepancy between what you charge and what you receive? I asked my accountant and he didn't know!

There is no VAT discrepancy -> you bill £2000 with £400 VAT on top and you receive £400 in VAT.

The issue is that you don't receive £2000 in payment alongside that £400 in VAT. You only get £1200 of it (rough guesstimate figure) with the rest withhold or paid on your behalf by the agency....

[TheFaQQer]

Is this even legal to pass on a tax?

It's legal as long as it is agreed between all parties - they cannot just add an extra charge to you without it being agreed in your contract though.

One of the schools that I am involved with has had to add a line in the budget this year to account for it, even though "our" payroll bill is significantly less than the £3m turnover. One of the other schools that I am involved with does not because it is being paid for by another entity instead of the individual school. Both are legal because of the contractual arrangements.

[northernladyuk]

Why is this thread in General?

Due to the Chutney Spoon Levy.

[ladymuck]

There is no VAT discrepancy -> you bill £2000 with £400 VAT on top and you receive £400 in VAT.

The issue is that you don't receive £2000 in payment alongside that £400 in VAT. You only get £1200 of it (rough guesstimate figure) with the rest withhold or paid on your behalf by the agency....

Ah...ok. That makes sense. Thank you

Time to change accountants.

[northernladuk]

Why is this thread in General?

Cause people are lazy.