Contractor Umbrella companies & tax "minimisation"

[Kudos]

I'm thinking of heading back into the world of IT contracting. I've always used a ltd company for varius reasons, but while researching perm v contract rates I came across an "wealth management" company offering to give you "more money in your pocket".

Using an example of £500/day, 5 days/week for 48 weeks (so, contract value £120k), they say you will take home £100k with them or £73k as PAYE or £81k as an umbrella or £86k as a ltd company.

Anyone had any dealings with these companies and pros/cons? Are you likely to get a kick in the nuts in the coming years by HMRC?

[R11ysf]

There are loads of these companies offering to save you money by paying less tax and instead paying half the amount to them in fees. I know of schemes where you can pay 7,8 or 9% and was even offered one where you pay 0% through various offshore accounts and pay the company 10% for running it for you.

Some of these are genuine loopholes and some others less genuine. From speaking to a few of them the one thing they all have in common is that they won't guarantee the tax amount you would have had to pay. So upside is you pay 10% tax but don't sleep easily, downside is you've paid them 10% and then the revenue decide your "loophole" isn't really a loophole and hand you a bill for you unpaid tax, interest and maybe a fine AND you've lost 10% you've paid to some other company.

Your decision to investigate the company and decide if you trust their loophole. In reality how many legal ways are there to pay 15% tax in total? For me I went for LTD and paying proper tax - at least I sleep well!

[worsy]

Likely to be some sort of trust that will forever be worry. IMO to be avoided but then I prefer to sleep at night.

[stneville]

Have a read through this thread. Don't expect a kick in the nuts from HMRC. Expect a kick in the nuts followed by them hanging on to them and squeeezing very hard.

Then they will change the law and back date it so the kick in the nuts was perfectly legal and then kick you again for good measure.

http://forums.contractoruk.com/accounting-legal/68...

Edited by stneville on Monday 14th November 15:59

[Kudos]

stneville said:

Have a read through this thread.

http://forums.contractoruk.com/accounting-legal/68...

As I thought, don't fancy looking over my shoulder for next 10yrs

[anonymous-user]

Sounds like tax "avoidance" to me, rather than "minimisation".

I would talk to a good accountant, they will tell you what you can get away with and still sleep at night.

Tax is painful, but getting caught not paying it is even more so!

[Kudos]

thanks. For avoidance of doubt, I have no problem paying my taxes and have a mediocre accountant (he's not the most dynamic in the world). Although, if I can minimise tax then I'd be a fool not to consider it