LTD Company Advice/Help

[fezster]

Like multi millionaire footballers?

It's unfortunate that HMRC manage to spin it as tax avoidance by the rich - when in actual fact, the vast majority affected are actually middle class or even low earners (as evidenced by the HoL report - for those interested, it can be looked at). It's classic HMRC strategy to portray those being targeted as the elite, because no-one cares if rich people get taxed.

To put into context - maybe 30 footballers benefited from Rangers? Yet over 100,000 people are being hit by the same legislation.

Something I found astonishing the other day when I was reading up on forums, which demonstrates how government misdirect - google "Hyrax". It's one of the schemes which promoted loans. Government ministers are on record as saying that they've won a case against Hyrax and will be collecting the charge from them. A quick google shows that the case they won was for "failure to disclose under DOTAS", for which they will be fined £15m odd pounds. The devil in the detail is that the information gleaned will allow HMRC to target individuals for all of the tax, and not Hyrax who were the promoters and made a nice tidy sum through fees.

 

[fezster]

I'm not talking about doing it all myself, I literally wouldn't know where to start, and I never said I was unhappy with the quote, if that's what it costs, then that is what it costs. With that being said, I don't make a habit of spending money needlessly, if I can save money by doing things myself then I will do (I don't apply this logic to accounting alone, I do this with EVERYTHING, as should everyone else. Blindly paying fee's without knowing what I am paying for is a good way of getting ripped off). The problem with that is I have no idea which parts are or are not easily achievable on my own without paying an accountant, which is the basis of why I started this thread. If something is straight forward then it doesn't make sense to pay someone to do it for me, one it costs me more money and two, I am always reliant on someone else doing it for me, if its straight forward I would rather learn how to do it and be self reliant.

As it stands, I am set to pay £300 for Payroll to pay myself the £12,500, and also £116 for the Confirmation statement. You are obviously experienced and know what you are talking about so my question is, for someone with no prior knowledge of accounting, are either of these things simple to do on my own, or should I pay for them to be done for me?? I have no issue at all paying the accountant to do them, but only if it's advisable, if either of them are straight forward to do then why not just do them myself and save £400. I have also written down there is a £120 charge for something else that I didn't make a note of, I will have to find out what that is on Tuesday.

Thanks

It can all be done yourself, of course - as with pretty much anything depending on your competency. But IMO, the time you would have to invest into it wouldn't be worth it. You'd make more on your day rate doing what you're good at.

A good accountant will also be able to save you (legally!) more than they charge through their advice. For example, I noted you said a salary of £12,500. This is not a tax efficient way of paying yourself. You should pay salary only to the limit at which you are entitled to NI contributions, but dont have to pay any NI. The rest should be as dividends. I'd suggest you get recommendations on accountants before engaging one.

 

[fezster]

Well, no, they really didn't find them legal. HMRC won a lot, with the Ramsay series of cases being the modern standard setting for the principal that tax legislation is interpreted on a purposive rather than strict literal interpretation. A lot of these were loan/EBTs of various formats.

There may well have been schemes which were not legal - I can't account for every single one of them. But as a general rule, the RFC case proved the scheme in point did in fact work - just not in the way it was intended. The EBT was legal and the "loans" were in fact loans. The transfer of money from the employer to the trust was classified as emoluments (I could be wrong - id have to google to be sure, but something along those lines) - and therefore the employER should have deduced PAYE and NI.

The key question being - if loan schemes were and are illegal and if the RFC "victory" was what HMRC portray it as - why was it necessary to introduce the 2019 Loan Charge in the 2017 Finance Bill?

 

[Jokester]

The Loan Charge 2019 doesn’t make them illegal. It encourages users to settle the tax due or even indeed repay the “loans” before the end of the last tax year. Those that fail to do so would then potentially be hit with the penalty.

 

[Pudney]

There may well have been schemes which were not legal - I can't account for every single one of them. But as a general rule, the RFC case proved the scheme in point did in fact work - just not in the way it was intended. The EBT was legal and the "loans" were in fact loans. The transfer of money from the employer to the trust was classified as emoluments (I could be wrong - id have to google to be sure, but something along those lines) - and therefore the employER should have deduced PAYE and NI.

The key question being - if loan schemes were and are illegal and if the RFC "victory" was what HMRC portray it as - why was it necessary to introduce the 2019 Loan Charge in the 2017 Finance Bill?

Loan schemes are and never were illegal. However, the perceived advantages of the loan schemes were incorrect, as a major argument in their favour was found to be incorrect by the Supreme Court, i.e. the very first initial stage was that the payments were earnings. Everything after that, including the loans themselves were redundant, and potentially just increase the overall tax. Also, the RFC case found that Sempra Metals and Dextra were in fact held incorrectly in the lower courts, which was damning to the EBT/loan industry as those two cases heavily underpinned the technical arguments used.

The Loan Charge was clearly introduced to strongarm taxpayers into settling, which has been exactly what has happened. Why continue arguing slightly different arrangements when you can just create a charge that negates the need for all the time and expense.

 

[Dirk Diggler]

To put into context - maybe 30 footballers benefited from Rangers? Yet over 100,000 people are being hit by the same legislation

I pay my taxes, I've no sympathy for anyone they doesn't whether they be rich or not.

 

[fezster]

I pay my taxes, I've no sympathy for anyone they doesn't whether they be rich or not.

Indeed. That's what everyone says until they fall onto the wrong side of what the taxman believes they should pay.

I suppose to anyone who has never been self employed (not directed at you, as I dont know if you have been or not), then none of this can be related to. Why would the vast majority of people who have their income tax deducted at source by their employer care for any tax advantage to be gained by others - but the point to remember is that self employed people have no benefits, no sick pay, no holidays, no pension contributions. If they lose their tax advantage, why bother being self employed. Except the economy would not function without them, so there has to be some incentive.

As a self employed person of many years, with the constant threat of IR35 (which nobody understands - least of all HMRC, given how many cases they have lost), the idea of a retrospective catch-all law which could reclaim all that "lost tax" they believe is owed by PSCs, scares the hell out of me.

 

[fezster]

The Loan Charge was clearly introduced to strongarm taxpayers into settling, which has been exactly what has happened. Why continue arguing slightly different arrangements when you can just create a charge that negates the need for all the time and expense.

Yes - I believe they refer to it as voluntary restitution. I've seen online some of the clauses in the contract they ask people to sign before settling. It says that the money is non-refundable under any circumstances - even if it turns out it wasn't owed in the first place. Which seems absurd to me, as it implies that HMRC themselves are worried they've gone too far this time.

It also says that the person settling must not engage in any tax avoidance in future. Does that include ISAs, Pension Contributions .... etc etc. All tax avoidance, yet perfectly legal.

 

[Jokester]

Such is the price of “avoidance”.

 

[Lankoss]

It can all be done yourself, of course - as with pretty much anything depending on your competency. But IMO, the time you would have to invest into it wouldn't be worth it. You'd make more on your day rate doing what you're good at.

A good accountant will also be able to save you (legally!) more than they charge through their advice. For example, I noted you said a salary of £12,500. This is not a tax efficient way of paying yourself. You should pay salary only to the limit at which you are entitled to NI contributions, but dont have to pay any NI. The rest should be as dividends. I'd suggest you get recommendations on accountants before engaging one.

The £12,500 is the figure that was given to me by the accountant for how much she suggests i pay myself out of the company. I will speak to her about it Tuesday and see why she suggested paying at the pre tax limit instead of the pre NI one at £8632. The more i am reading, the more likely it is that one just going to let them do it all as it looks like I would be out of my depth. I'm still glad I asked the question though, if you don't ask you don't get as my mum would say.