• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Is this illegal of my umbrella company?

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Is this illegal of my umbrella company?

    My umbrella company sets up two ways to get paid:

    method a) is via PAYE, where they declare my gross pay as my salary

    and

    method b) is via their percentage scheme, where they declare some of my gross pay as my salary, and some of it they declare through the business. This means that they can pay a lower rate of tax through the company, and therefore I can receive more.

    They asked me how I'd like to be paid, way a, or way b.

    I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

    My question to you guys is what they are saying true? Is it illegal to do what they are doing? If it's a 'grey area' which is not strictly illegal, and I won't be punished for it, then I'm okay with that, but I want to make sure I don't go against HMRC legislation.

    Regards,

    #2
    Originally posted by Kappa View Post
    My umbrella company sets up two ways to get paid:

    method a) is via PAYE, where they declare my gross pay as my salary

    and

    method b) is via their percentage scheme, where they declare some of my gross pay as my salary, and some of it they declare through the business. This means that they can pay a lower rate of tax through the company, and therefore I can receive more.

    They asked me how I'd like to be paid, way a, or way b.

    I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

    My question to you guys is what they are saying true? Is it illegal to do what they are doing? If it's a 'grey area' which is not strictly illegal, and I won't be punished for it, then I'm okay with that, but I want to make sure I don't go against HMRC legislation.

    Regards,
    Sounds dodgy. First question is on what basis is your non PAYE pay made. Dividend? Loan? Expenses?

    Comment


      #3
      Originally posted by Old Greg View Post
      Sounds dodgy. First question is on what basis is your non PAYE pay made. Dividend? Loan? Expenses?
      Actually, forget that. Run. Give Contractor Umbrella a call.

      Comment


        #4
        I think anyone selling a scheme that claims to reduce your tax liability is on dodgy ground and you should walk away, fast.

        I would also drop a note to HMRC with a copy of the correspondence and ask them to confirm if it is a legitimate scheme. We need to report these people because it's us that get chased a decade later when HMG change the rules and retrospectively chase for the money. The liability will ultimately rest with you, regardless of what they say.

        Comment


          #5
          Stay with method A.

          Actually, leave the umbrella as you can be sure that they’ll close the company down the moment HMRC comes sniffing around method B.
          "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
          - Voltaire/Benjamin Franklin/Anne Frank...

          Comment


            #6
            Originally posted by Old Greg View Post
            Actually, forget that. Run. Give Contractor Umbrella a call.
            +1

            Comment


              #7
              Originally posted by Kappa View Post
              My umbrella company sets up two ways to get paid:

              method a) is via PAYE, where they declare my gross pay as my salary

              and

              method b) is via their percentage scheme, where they declare some of my gross pay as my salary, and some of it they declare through the business. This means that they can pay a lower rate of tax through the company, and therefore I can receive more.

              They asked me how I'd like to be paid, way a, or way b.

              I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.

              My question to you guys is what they are saying true? Is it illegal to do what they are doing? If it's a 'grey area' which is not strictly illegal, and I won't be punished for it, then I'm okay with that, but I want to make sure I don't go against HMRC legislation.

              Regards,
              This is blatant tax avoidance.

              The consequence of method b is an HMRC enquiry, perhaps incorrect tax returns and penalties, probably a demand from HMRC executed with some prejudice.

              Don't do this.
              Best Forum Adviser & Forum Personality of the Year 2018.

              (No, me neither).

              Comment


                #8
                Originally posted by Old Greg View Post
                Actually, forget that. Run. Give Contractor Umbrella a call.
                This. Save yourself a world of pain further down the line and find another umbrella.

                Comment


                  #9
                  Hi Kappa,

                  Our advice is to always stay clear of schemes which promote aggressive tax efficiency. HMRC doesn't ever 'rubber stamp' schemes, so no-one can ever be sure if it has been cleared by them.

                  You did mention that you would be okay with the scheme "if it's a 'grey area' which is not strictly illegal, and I won't be punished for it". We would urge caution with this approach as HMRC has been known to go back and close "grey" loopholes and pursue people for unpaid tax.


                  Kind regards

                  Zeeshan
                  Dolan Accountancy

                  Contractor Umbrella

                  01442 795 100

                  Comment


                    #10
                    Originally posted by Kappa View Post
                    I was sceptical about method b, and so I asked whether it was illegal or in breach of HMRC regulation, and they assured me that it wasn't illegal, and that it was compliant with HMRC, and that my tax liability was with them.
                    Until HMRC come knocking on your door for the personal tax liability which technically has nothing to do with them - as most people have said run a mile. TBH if they are offering 2 schemes, I wouldnt even touch the PAYE option - if they get done for the scheme side - who knows whether it will have a knock on effect on the other side. Find yourself a company that doesn't offer "scheme's", just straight forward PAYE umbrella.

                    Comment

                    Working...
                    X