tax avoidance - not just footballers

yes I could set up on my own, but I am pretty risk averse, and like the security (hmm) of employment. I was considering it before my ex left - but that would have been with the fall back of his income.
Plus tbh the back-up that a reasonably sized firm gives you in terms of access to greater knowledge banks, ability to off clients a wider range of services etc.
I work for a mid-tier firm, but we are local in outlook - local accountants with a bigger back-up. I would certainly hope that my clients don't feel they get a call-centre approach from me, in fact I would be fairly horrified if they did think that.

And I agree on the OP, start the thread bashing something which it turns out that he is doing. Oh but the figures involved with the people he is bashing are much higher, so it is ok for him, but not for them .

Replace god with for - sorry, rubbish predictive text!

Just wanted to check - paul88 seemed to be bashing all limited company structures as tax dodges and if turned out s/he has one.

Dh's contracts (there's a few with multiple clients) are all ok for IR35 - I got confused by what you meant by falling under IR35 whether than meant being compliant or not.

So it sounds like we were too cautious and payed more tax than we legally had to when I was a sahm - I'm just barely a higher rate tax payer now so there's no advantage to share income now.

If you wanted to benefit from dividend tax rates you could always go out on your own - I think there's a real market for accountants god small businesss who get sick of the call centre approach by the larger firms. Of course the stress and uncertainty can be crap - it's one of the main reason I'm back at work as we found it very unsettling to not have any security.

my personal tax set-up, as was probably quite clear from the comment I made about wishing I could route my services through a limited company, is that I am an employee.
And yes, a chartered accountant.

Dh's contracts so not sure of all details - he's the one who deals with the accountants. I'm not up on the fine details of the contracts and the legislation - I just do the payroll. I'm confident we're ok for tax as friends in the exact same arrangement did get investigated by hmrc (random check) and there were no problems.

What is your personal tax set up? Are you an accountant as you seem to know a lot about it.

on the other hand, if your contracts do fall under IR35 then paying yourself a salary of "say £25k" does not comply with the IR35 rules, and by not applying them properly you are potentially evading (not avoiding here) tax.

Do your contacts fall under IR35?
If not then I would honestly say that you have been poorly advised.
The 2008 change which you refer to is presumably the Arctic Systems case, which in no was stops a husband and wife each having a shareholding in a company and each taking dividends on these shares.

Chasingsquirrels - all the guidance we've received from two different accountants suggests that paying a spouse dividends is no longer acceptable to hmrc and it opens you up to potential problems. You might get away with it but when I was a sahm we were advised strongly against it if we wanted to ensure compliance.

Similarly for not paying yourself a salary. I don't know anyone who does either of these things because it's a grey area and most of us choose to play by the rules and not risk hmrc claiming unpaid taxes from years back.

(yes a minimal salary of just over the threshold for NI can be a tax benefit but our accountant recommends paying around 25 K as a minimum to avoid hmrc questioning things).

So I'd guess most of us aren't costing the country any tax revenue since what's being described here is not common practice in our circle of aquaintance. We do know one guy who perhaps crosses the line but he's by far in the minority!

you don't have to pay yourself a salary either - as a director, without a contract because having one would bring you into national minimum wage regulations, you aren't an employee but an office holder and there is nothing to say you have to take a salary.

The reason for taking a salary is that at just under the personal allowance you aren't taxed on it, but the company gets corporation tax relief (which it doesn't on dividends) and you get the NI credits towards your second state pension.

your spouse can own shares and receive dividends though. And if your spouse is a director then they can receive remuneration for holding that office.

Paul88, although I agree with much that you say i think you will find Marr and Paxo are not solely employed by the BBC, both are also published authors and both do paid speaking at conferences and write for newspapers/magazines.

Just to clarify - do you pay yourself entirely through dividends? You must run a payroll - our accountant described having a minimal salary as pushing the limits of the regulations. That sounds very dodgy and is tax avoidance - you must be paying yourself a salary as well?

Chasingsquirrels - you can't pay your spouse any more. That loop hole was closed in 2008.

Paul88 - I agree that there is no way the BBC should be paying self-employed contractors the way they are and I'm glad to see of being pointed out. Also, my dh makes a bit less than yours and pays himself a decent salary as well so his tax bill is probably closer to paye than yours is. If you do this yourself can you see why I'm so frustrated that it's been described as tax avoidance?

Btw the extra admin costs of running a payroll are absolutely zero. I run dh's (for free - we are not paying me for it because we've been advised it's a bit of a grey area) and I also run one to pay our nanny. It's very straightforward and hmrc have always been helpful with questions.

one-man-bands can save significant amounts of tax by putting the business through a limited company, via the payment of a small salary and then dividends (preferably split with a non-working spouse to utilise 2 basic rate bands before higher rate tax).

If they should be under the IR35 rules then they are evading tax by not applying those rules. And if they do apply them then the aforementioned tax benefits are largely no longer applicable.

If IR35 doesn't apply to them then they are simply structuring their affairs in the most tax efficient way.

I wish I could put my services through a company and sell them to my employer, it would save me a lot of tax.

Vat costs us "nothing" but if my dh was a salaried employee then the government would not be getting it, hence why I think it should be included in any sort of comparison of the revenue he generates for hmrc compared to a salaried employee.

The reason I keep returning to these threads is because I'm genuinely concerned that there seems to be a view that you're somehow avoiding tax by being a limited company. It is not fair or true for many of us and I'm sick of hearing my dh lumped in with the wealthy tax avoiders who can move money around in ways we wouldn't. There are options to run companies out of jersey etc and that is an effective tax avoidance measure that hmrc needs to clamp down on somehow but simply having a limited company is not! It's really upsetting for those of us who are following the rules to the spirit as well as the letter. Can you understand that and qualify your statements?

Paul88 but a salaried employee doesn't generate vat. When you add the vat with the income tax my dh pays on his salary and dividends then it is the same as if he had the same net income as a salaried employee.

The threshold for vat registration is a relatively low company turnover I think - we were on the limit when dh first went this route and he was by no means one of these ultra high earners (it's way less than 100k per year).

Basically can we please stop bashing people who have limited companies? It's labelling all of us unfairly as tax avoiders and "wealthy".

But by all means review legislation to close loopholes! It's a minefield of contradiction at the moment.

the real question on avoidance/evasion is does the law need changing,

Nick Clugg keeps mentioning it briefly, but never gives details.

Barclays may want the law to stay the same.

we are starting to see the ethics(?) of a millionaires Cabinet writ large.

Vince looks driven into the ground by the situation

And the Mail and the Torygraph would like to break the Coalition (They dont even like right wing liberals)

Its not uninteresting. Blair started publicity stunt government and Camerooney is
advancing it. "Gabby" PS I wonder what Mrs Logan makes of situation?

Some interesting points being made on the Is it legal? thread by CinnabarRed, btw.

Agree with you Paul. Just been talking about this on another thread. It's about time the tax loopholes were closed and the whole system was made more transparent.

Two hospitals in London are about to lose 1000 jobs. There is a connection.

Another poster wrote that the tax avoided by small and medium businesses had a large part to play in this.

Limited companies don't have to be VAT registered, only if their turnover is above the threshold. You can register voluntarily, but it's not required as a prerequisite of being limited.
Just clarifying for anyone reading....

If you've set yourself up as a limited company then you charge VAT to your clients - I've done the math and the government gets the same in tax revenue from my husband as if he was under PAYE because of the VAT. Actually the only party benefiting is his main client - who doesn't have to take on the risk of an employee. So can we stop bashing people who have limited companies (in general - not complaining about this specific case as they're in the public eye)?

Also to avoid issues with IR35 my DH runs around getting a few other contracts a year to make sure we're following all the rules too. It's not always easy and I'm sick of it being assumed to be a tax dodge (not saying that some people don't fiddle the system but most of us don't!).

Actually, it's a very common thing in my area and there's three guys on the street who are limited company outfits. None of them (including us) is paying their spouse for help because it's not worth bending the rules - I know someone who was investigated by HMRC (and was fine, did everything properly) and the general consensus is that it's not worth it.