Professional Contractors Group

Professional tax dodgers _still_ whingeing, will it ever stop?

Company expansion investment.

Well I for one am glad that the HMRC have recognised that a purely commercial relationship can exist between husband and wife.

"The legislation does not consider any

situations where an arrangement has been made on a commercial or arm’s length basis."

My wife has invested 10K in the form of an interest free loan in my business due to a cashflow problems created by the purchace of a 72 inch display evice needed for company presentations. In return for this investment she required a 50 % share in my company which means that i know longer have the final say in issues like: "individual one is party to, or has power over the relevant arrangements";

Don't think they will win without a fight.

forgive the dyslexia

Note to self "Always proof read" *know<=>no.

In my defence

Getting a bit tired of this now, but I'm happy to defend myself so....

Re: JamesH

"I think you are the one who has no idea...."

I TOTALLY agree with you - I don't know why you would think I wouldn't. Well, apart from the bit about having no idea and crawling back under my stone. And by the way, I'm not childless :-) And I'd LOVE to ignore the real world, but unfortunately it has a nasty habit of reminding me it's there.

Oh, and as for the "devious accountants" thing - well, I don't know any devious accountants and I don't know anyone else who knows one either, so it looks like you're another one who doesn't actually know what he's talking about.

Re: A. Coward "I'm with Colin and A.Coward "...

I class working and not getting paid for it as "unpaid". Sorry - is it me? And you can't really charge more when there's nobody to actually invoice can you? That's what happens when you work for yourself.

Interesting difference in attitudes...

AC wrote:

"So if you're a mom+pop plumber company with the man doing the plumbing work and his wife fielding the calls from the customers and doing the admin, the new rules say the man should be paid a lot more basic salary than the wife, and by extension pay a hefty chunk more tax".

Hmmmm, funny that. How is this scenario different from a huge corporation in which lots of poor people with degrees, PhDs and long experience work hard earning the money, while a handful of rich people in pin-striped suits sit back at headquarters "doing the admin". Somehow, in the big company, those who stay at home and do the admin earn ten or more times as much as the workers who actually earn the revenue.

The key point is that a limited company is, by definition, owned by its shareholders. They have the power to decide whom to employ (including themselves, if they so wish); how much salary to pay their employees; and how much to take in dividends, and when. Now if the present government wants to prevent married couples from setting up companies, they should pass laws to make that illegal. But once a company exists, it should be allowed to conduct its business like any other company.

The tax I pay...

My company invoices about £80,000 per year, of which I pay about £20k in various taxes to the state.

I take home about £60, but have to cover all my travelling expenses, time out, pensions and all the other expenses involved.

The money I have at the end of the month is equivilent to earning £40k as a permie - yet if I had a permie job for £40k I'd only pay about £10k in taxes.

Therefore my family pay twice as much tax as a permie - and now the govenment want to take more - thats whats unfair.

The neverending struggle

Tax payers and accountants are always trying to think up new ways to maximise their income and minimise tax payments, so it's no surprise that the HMRC is always trying to find new ways to grind taxes out of people - otherwise the tax haul would decline year on year (unless the government just puts tax rates up, which would be unfair on salaried staff who've less opportunity for tax avoidance schemes). This is the way it's always been, and it's part of the game. If you don't like the constant struggle, get a job for someone else and pay the standard tax rate.

As for people advocating flat tax. So everybody gets a prebate every month depending on their situation? Just like the current tax credit system? That's working so well. Or maybe the people advocating the flat tax are IT consultants who're hoping to get work setting up the prebate system and then fixing it when it falls apart.

Re: The tax I pay....

>My company invoices about £80,000 per year, of which I pay about £20k in

>various taxes to the state.

Normal income tax would be 27,126.40.

>have to cover all my travelling expenses

That's deductible, permies have to travel to work as well, that travel is not deductible.

What fantastical pension funds do you think perm jobs provide?

Me permie

Used to contract/freelance - but to be honest I hated having to be my own boss and administrator, seemed to spend almost as much time doing the paperwork, getting people to actually decide what it is that they want (difficult to spec otherwise) and pissing about chasing payment (and so on), as I did doing the job that I actually enjoy.

Now I'm on 37.5 hours a week (paid - don't get overtime but do a bit unpaid when required) and spending nearly all of it doing the job I actually enjoy... don't get paid as much as I could contracting, but I actually enjoy most of my working life now and have more free time. Oh, and I know how much I've got coming in each month.

Work - life balance and all that.

That's my tuppence worth on the whole permie vs contractor debate. The only real difference on this whole "tax avoidance" issue is that the permie has a boss who's job it is to work out how to minimise the tax they pay, the contractor has to do it themselves =)

@Everyone who thinks consultants pay no tax

I was sad enough to compute the tax contributions of my company over the past 12 years. £2 000 000

If you can find any permies here that have generated that level of tax for our illustrious government bring em on.

It might actually be considerably higher - as I don't believe I included the VAT generated - my consultancy works primarily for financial institutions - so actually generates VAT rather than just shifting it around.

The worse thing about this legislation is the lack of a clear tax position and of course the broad nature of the change which HMRC deny - but will be applied everywhere. The consultation document is worded in the most sloppy of manners and should in reality never pass the statute books.

Also - to the whingeing perms - who do you think employs you ? Do you think your Directors are tax cheating scumbags too ?

Also instead of getting worked up about contractors/consultants - why don't you get worked up about the goverment wasting your tax dollars on barmy schemes like ID cards - or £512m on a prison IT system that will never work, or £7bn and rising on an NHS system that nobody wants ?

The irony of much of this legislation is that our "Labour Masters", trotsky's all of them are quite happy for "Fat Cats" to enjoy these very tax breaks but not for those who actually work for a living.