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Original poster

tax avoidance - not just footballers

31 replies

Paul88 · 07/02/2011 07:56

www.telegraph.co.uk/news/newstopics/politics/conservative/8306003/David-Camerons-new-spin-doctor-and-his-tax-avoidance-plan.html

Great to see the telegraph drawing attention to this oh so common scam of people avoiding tax by pretending they are a company offering services when really they are just an individual working for a single employer.

Instead of paying income tax and national insurance they just pay corporation tax at 21%, soon to be reduced to 20%. And the employer avoids employers' national insurance.

She is avoiding over £20000 in tax each year.

Shall we see whether this gets discussed on newsnight when Paxman is doing the same thing...

OP posts:
kerstina · 18/02/2011 10:08

Am really angry the rich continue to tax avoid while we get our child tax credit taken away.Sad

Niceguy2 · 16/02/2011 15:59

IR35 was expressly set up to prevent people from using limited companies to avoid paying income tax by paying themselves big dividends. So a limited company in itself isn't a license to dodge tax. Otherwise we'd all do it.

Sole traders cannot pay themselves dividends so thats a moot point.

Now I don't know for sure what they earn and whom their customers are and I'm pretty well sure you won't know for sure either. But assuming they're not being chased by the taxman then they've satisfied the criteria HMRC dictate.

Frankly as long as what they do is legal then it doesn't really matter whether you personally think its right or wrong.

Why is it though that you have such a beef against people minimising their tax liabilities legally? You always seem to be banging on about this.

If you get a parking ticket and offered a discount if you pay within 14 days, do you pay the full amount on principle, so the poor don't go without? Or do you take advantage of the reduction and move on?

Original poster
Paul88 · 16/02/2011 11:39

It is a scam and I well know it.

It is not illegal.

Whether it is 'wrong' is a matter of opinion.

It is a way that the rich get to pay less tax and I and very many others would prefer they pay their share and save us from these disastrous cuts.

The case above is a classic one of a single person offering services to a single company - she is not allowed to work for anyone other than the BBC and nor is Paxman. They escape IR35 by going through a limited company instead of being a sole trader.

@ellina - no, no national insurance on dividends at all - either employers or employees. The company saves 13% and the individual saves 11%. Zero tax payable on the first £37000 of dividend income then 22.5%. Much lower rates than people being paid as employees.

OP posts:
Niceguy2 · 16/02/2011 08:48

It's not a scam at all Paul and you full well know it.

There is nothing wrong with structuring your tax affairs to minimise your tax liabilities so long as you do so legally.

Besides which, Labour introduced IR35 in 1999 to prevent people avoiding tax as disguised employees. Now to be able to do above, the limited company has to be able to demonstrate they are not simply a disguised employee. So for example, one test is if the company has multiple customers, or multiple employees.

ellina · 16/02/2011 00:06

So how do they get their money out of the company? Dividends? I think these incur national insurance and they then declare them as income on a personal tax return - thus paying income tax.

Chil1234 · 07/02/2011 09:40

There are risks involved with being a freelance operating as a sole trader or a company rather than as a permanent employee. No job security or holiday entitlement, for example. No redundancy deals. My friend's DH is an owner-driver for a parcel delivery company.... has to employ an accountant to deal with his tax and VAT returns, keep receipts etc. It's not exclusive to footballers or journalists.

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