Norla Consulting

**4Contractors** · 26 August 2004, 12:58

I have a contract on a very modest rate. I employ an accountant and pay myself a minimum wage salary. The company secretary and I have a 2:3 split of the remaining dividend payout. I pay tax at the basic rate, use flat rate VAT and claim very little on expenses. Last time I worked it out my return on gross was surprisingly around 80%.

The trick is to keep the salary low, share dividend payout, keep out of IR35 and never pay higher rates of income tax. If you can do all of these things your return will be as good or better than any other option and without any risks or stress.

Sorry completely forgot the original question and very unfair to go off at a tangent in the 2nd post of a thread. I have heard of Norla consulting but do not know their payment system. Would imagine they operate some sort of Irish/offshore system that uses rapidly depreciating currency loans to mask payments. From our experience these sorts of companies are not taking on new clients at the moment, unless you know different ?

**tim123** · 26 August 2004, 17:04

The trick is to have a non-working partner with which you can share dividends and keep all of your billing in the standard tax bracket.

But not everyone is in a position to do this and if you can't, you are stuffed.

Assuming that everyone can is just plain silly

tim

**chunk8928** · 26 August 2004, 17:05

Sorry, but what do the last two responses have to do with the original question ? !

**Bradley** · 26 August 2004, 17:20

Re:EBTs

chunk - if Norlas an EBT then the its too good to be true.

The Revenue are clamping down on EBTs currently, especially those based offshore.

To be effective you have to give away what you earn to the EBT and then ask the trustees if they'll consider giving back some of your money as a loan.

The truth is of course that the EBT never has a choice about lending you back the money. The Revenue don't like that and will argue that the money is all earnings subject to PAYE.

The other thing to consider with EBTs is that they could disappear with your cash and you don't have any legal right to get it back as you've given it away.

**Bradley** · 26 August 2004, 17:27

One Other Thing

IMO this will fall within the Revenue's definition of a scheme to avoid tax - it's certainly marketed like that. This means that either Norla or their clients will have to inform the Revenue about its existence and that its been created to avoid tax.

In any event you should ask Norla if they consider that they're caught under the new rules. Schemes registered overseas without a UK presence don't have to but the liability to register then falls on the clients to do so i.e you

**4Contractors** · 26 August 2004, 20:43

Re: One Other Thing

Assuming that everyone can is just plain silly

I wasn't assuming anything tim123 just presenting the best case scenario for someone on a lower contract rate and with a partner who can absorb the dividend without going into higher rate tax. It obviously doesn't fit your profile tim123 but I imagine a large percentage of contractors fit or nearly fit this profile and may not be aware of the position they are in.

Your comment was rude and unhelpful - being accused of being silly when I am trying to give out useful information is not what I would expect

**antagoneyes** · 26 August 2004, 20:58

Re: One Other Thing

Sorry, but what do the last two responses have to do with the original question ? !

It's clear that nobody knows anything about Norla chunk but at least they are not taking this piss out of you and have tried to be helpful.

If you don't like the responses may I suggest you go to computercontractor.net where you will get the respect you probably deserve. In other words feck off !!

**ASB** · 27 August 2004, 10:32

EBT's

Bradley,

Ignoring the fact that an EBT's effectiveness as a shelter is questionable (although personally I think they may have been effective up until this year - or why would there have been very specific new rules) - I would have one other concern about it.

If the scheme were wound up for any reasons surely the individual would simply be a creditor, as such they could come and demand their cash back. Alternative would just be to write it off - this could be a dodgy action for the liquidators if the creditors have any assets. It seems reasonable to assume that this could happen before the repayment mechanism put in place had matured.

I don't know if that could happen in practice but would surely be a serious risk in the event of a revenue challenge.

**4Contractors** · 27 August 2004, 11:18

Re: EBT's

Yes this would appear to be the big risk with the EBT/offshore setups we have looked at. The depreciating currency loan has to fully depreciate in order for the client to take ownership of their money.

If anything went wrong those currency loans may well be a significant liability to clients who may be forced to pay them back to an unscrupulous EBT at face value. I also wonder what would happen to these depreciating loans if the scheme were to be forced to close partway through the loan cycle for some reason.

Historically these systems have worked well despite the dubious setup but there are questions to be asked in the current unpredicatable situation.

Norla Consulting