MarkO

I shouldn't really have to worry about IR35, as I've got several business interests at once anyway generating income for the company, had a perfect contract in my last place (zero notice, substition clauses galore, etc., etc), and am now working at home on two contracts at the same time.

Mind you, nothing's guaranteed.

Bas, it was complicated 'cos my circumstances changed at the end of last year, so we re-jigged a load of stuff. So there was tax I'd paid for one thing which then became inapplicable because we changed the dividends, loans and other stuff to reduce my other tax liabilities. Previous tax years came into the equation too. If you want the ins and outs explained in full, it's probably better if I give you my accountant's email address.

[Edited by MarkO - 6/4/2003 10:03:57 AM]

carl

I know, and the best bit is that "bounteous arrangement" is a new phrase that the IR have come up with when describing the new ("No, it's not new -- it's been around since the 1930s" ) S660a legislation. It has no basis in law.

The best bit is that the IR/govt is now considering tax avoidance (not evasion, avoidance) "immoral" yet the IR did a sale and leaseback of a load of its buildings to a company registered in Bermuda (tax haven), and the Labour Party avoided nearly £1m in VAT when buying their new HQ by treating it as a business acquisition using a transfer of going concern mechanism, rather than a property purchase

[Edited by carl - 6/4/2003 10:50:06 AM]

TurboKitty

If it makes any of you feel any better, I know of a case of the IR being owed £8300 that they aren't going to get.

[Edited by TurboKitty - 6/4/2003 1:44:04 PM]

Dan B

I'd just like to thank the inland revenue for being useless... They owe me close to a grand, and I've been trying to get it since April fools day [img]images/smilies/mad.gif[/img] Just spoken to someone at Chapel Wharf, and there is still a 3 month wait, whilst I'm in serious need of that money.

It goes without saying that if I owed them money, blah blah blah.

Thay can't even confirm that they have received the copies of my p60's...

andrew6321

tell them you're gonna start charging them interest...and a late payment surcharge...

Dan B

I think they have to give me the interest anyway... 6 months @4% apr 1K = 20 quid. woooopie, whilst I get to push the car to work.

MarkO

If it makes you feel any better, the IR have got 4k of my cash which I won't be seeing until October. Basically, last November I paid 4k in tax for a director's loan which was repaid before the financial year-end. But they won't refund me the bloody money until Oct this year. [img]images/smilies/mad.gif[/img]

Funny how when they have your cash, you can't get it back for months, but if you're 2 weeks late paying a tax bill, they want it immediately.

Dan B

Is there anyone to complain to? Some regulartory board or something? Its just stupid... I can guess it would take someone less than 10minutes to sort out [img]images/smilies/mad.gif[/img]

Suresh

Dont get me started.
Still waiting for around € 4k back from the Clog tax numpties for 2001 / 2002. As I'm an alien 'Buitenlander' things seem to take a little longer as different forms and different tax departments are involved. Apparently they don't pay interest either! Fuming mad but can't do a thing about it!!

andyd9577

iTrader: (1)

im in the merchant navy and between april 02 to april 03 spent 225 days out of the uk which entitles me to 100% refund of approx £4500, but what a nightmare im having getting it back! they were quick enough to issue me with £100 penalties for late tax returns!!! i hope it comes soon the scoobs ready for go faster bits!!

Echo

'Cos of my big miles and getting 13p a mile back from the company I claim a heap from the IR every year - several grand - each year they are 'about to pay' then 'investigate' me for several months :-( This year(for last year that is) they paid straight away, the missis spent it on sofa's and stuff so the PPP will have to wait. Grrrr.

:-)

Mike

PS. I have found that calling them and giving the 'I'm hard up' line can get sympathy and speed things up if you get through to the right office.

Bas

Do any of you guys submit your tax returns online?

If you do (and you remember to tick the box for a repayment) you should get your refund almost immediately.

The last 2 years I've had the dosh credited to my bank account within 2 to 3 weeks of the end of the tax year.

Manual tax returns do take longer as they rely on someone at the tax office punching in the figures.

Bas

carl

MarkO -- surely rule 1 of contracting is "Don't overdraw your directors' loan account?"

MarkO

Carl - No, it's not? Why not go o/d? Doesn't cost anything, and it's a nice way to take the cash out of the company regularly without having to take dividends every month.

Usually I clear the director's a/c with a dividend at the right time of year, meaning everything's straight before the financial year end, so it's not a problem. It's just that this year, I decided that rather than pay the a/c with a dividend, I'd put some cash back into the company to clear it; unfortunately, we made the decision too late, so I'd had to pay the tax already, meaning I now have to wait 9 months and 1 day for the section 419 repayment, which is a PITA.

At the end of the day, it doesn't matter how you take the money out, they still get you in the end.

TopBanana

Legalised thugs

carl

Personally I try to take out enough salary to live and then pay out one or two dividends a year,
YMMV, etc

Bas

Marko

If you can show that the loan was repaid within 9 months and 1 day of the financial year end in which it was taken out, the tax shouldn't be payable anyway...check with your accountant

Bas

Toonman1

As was said earlier - file online. Got my refund 4 working days after submission.

MarkO

Bas - that's exactly what happened. I repaid the loan, but I've already paid the tax, so I have to wait 9 months 1 day to get the tax back.

Carl: Unfortunately, it's not as simple as that. I didn't want to take too excessive a salary, 'cos of the double NI hit.

So I take about half the company's earnings in salary, and left the rest in there. I then take out what I need as a loan on the director's account, which gets repaid with a single dividend at the end of the year. So, to all intents and purposes, exactly the same as you, except that I don't have to wait until I take the dividend to get my hands on all that lovely lolly.

It's all different now though, 'cos a) my outgoings are hugely reduced, so I can live well within my salary (which I've reduced) and b) no significant money's come into the company since November anyway.

carl

Oddly enough, so have I (because of the double NI hit). It's a balancing act between paying yourself little enough to mitigate the effects of double NI, and paying yourself enough to avoid the attentions of an IR35 investigation

Bas

MarkO

Sorry mate I might be missing something...I don't see how you would have already paid the tax as it wouldn't be payable until 9 months and 1 day after the financial year end anyway.

Two hypothetical situations for you based on a loan of £10,000 outstanding at a financial year end of 31/12/02:

1)Loan not repaid by 01/10/03 - S419 tax of £2,500 payable 01/10/03.

2)Loan repaid say 31/03/03 - NO S419 tax payable.

Or did you loan actually relate to a previous year in which case I agree the relief isn't due until 9 months and 1 day after the financial year in which it was repaid?

Bas

carl

You and me both, but you can't be too careful when the IR are involved. Are you affected by S660a as well?

MarkO

S660a? Wassat? You're scaring me now.

I might well be (or might not)...

carl

http://www.pcg.org.uk/campaigns/S660...660Advice.html
It's a cunning approach. Catch a load of contractors with IR35, then try to stiff the others with S660a.

MarkO

Ah, I see. Taxing your wife's dividends as if you'd earned them yourself.... Doesn't affect me, 'cos my wife doesn't take any dividends. She takes a small salary for acting as company secretary, but I take all the dividends.

TBH, I have to say, I can't argue with the revenue. Whilst it's a bit mean, it's fair too. Most contractors (though they like to deny it) are really disguised employees. Whilst I don't think it's unfair for them to take earnings as dividends to avoid being clobbered twice for NI, I think that using your wife's tax allowances for what are effectively your own earnings is a tad rich.

A lot of contractors get a lot of abuse from permies for not paying enough tax through their service companies. This, of course, is rubbish, since income tax will always have to be paid on earnings whether it's dividends or salary. It's the NI we avoid, but it's fair 'cos if we didn't avoid it by using dividends, we'd end up paying nearly 20% in NI - around twice what permies pay.

However, if you start paying dividends to your wife, you really are paying less tax. So I can see why the revenue are getting tough on it.

On the other hand, I can't see how they'll legislate for it - it'll be even more complicated to prove than IR35. I mean, who's to say what the difference is between, say, my wife owning shares in my company and taking dividends, and Richard Branson's wife owning shares in Virgin and taking dividends? Obviously the former case would be caught under s660a, but the latter wouldn't, but what's the difference legally?!

Sounds like the IR have got 'emselves another can-o-worms there....

carl

Indeed -- the implication is that if I were to employ half a dozen people then spend my days playing golf, I could take out a load of share dividends for which the tax liability would be down to my employees, as they're earning the fees

I don't really see how the IR can put a price on a wife's input to a company -- for example although she may not actually earn the fees herself, by removing the burden of administrative and accounting tasks she enables the husband to do more fee paying work. And what happens if you loan the company some money from a joint account? Effectively half of that money has been loaned by your wife: surely she is entitled to something back for taking that risk?

If you're not caught by IR35 or S660a, they're now looking at seeing if they can catch people working at home by insisting that they pay commercial rates on rooms they use as an office (even if they're "dual use" rooms)

Bas

s660 only applies if there is a 'bounteous' arrangement involved in the transfer of shares to the wife

e.g. you set up a company and issue 50% of the shares to your wife on incorporation. If she then receives divis on those shares, she has got something for nothing.

There are various ways around the legislation and as the article says there have been no decided cases yet so no-one's sure of the implications yet.

IMHO its more scaremongering than anything as the legislation has been around for decades but I've never had a client picked up on this area...yet!

Bas

PS MarkO - did you see my last post on your S419 tax (don't want you paying tax where you don't have too )

Bas

From the horses mouth...

http://www.inlandrevenue.gov.uk/bulletins/tb64.pdf

Sorry don't know how to make it clicky

Bas

carl

Yes, I saw that the day it was issued. They just make it up as they go along.

Of course, what they're actually after is coming to an "arrangement" with people who are caught. "You owe us £42,000 but we'll settle for £10k" and then hope that people will cough up. Some of them will...

Bas

Unless they've got a good accountant...