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Limited Company, Umbrella, Agency PAYE..IR35

10 replies [Last post]
Wed, 2007-08-22 05:55
mark johnson
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Guys just throwing this in as I feel I need guidance, been perm positions mostly, now going contractor..I have a few umbrella companies in mind, if its not too intrusive how do you all work and what would you recommend? Thanks in advance
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Replies

Sat, 2007-08-25 02:34
#1
Larry Bjorn
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Umbrella companies are becoming rather obsolete. The main reason for their existence was to provide a vehicle to avoid tax through elaborate company structures. However, from what I understand, the tax man has caught up with them (2006) and closed the tax loophole they operated within. Without tax advantage, umbrella companies are just expensive and complex payment vehicles.

I am having an Ltd company and making use of an accountant. I find it really easy and tax/cost efficient.

When I did my research about this subject I noticed a lot of marketing efforts in scaremongering and muddling the waters about IR35.

Regards,
Larry
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Sat, 2007-08-25 00:15
#2
Jerome Atkin
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When I was working in the U.K I was going through a company who set up a contract, which sets out terms for which avoidance of IR35 issue. I believe it is the contract which you set up which the Inland Revenue look at, it was a while ago so best look into it.
Most companies who offer "umbrella" services, Gabem, Brooksons will now offer a LTD company service. It works the same but you are now set up as a LTD company. I think you pay a little more for this.
I went through a company who run it very well. I could claim a lot of things which Gabem and Brooksons would not let you. Like having one room in your house for an office, broadband and other things like this. This helps offset more tax so you get more money in your pocket per week / month.
If you need his number P.M me and I will provide.
Make sure you do not go umbrella and make sure what ever you decide IR35 does not hit you.
Any good company will be able to tell you what to do and what to avoid, take there advice !
If you set up your own LTD company again this is an option but I know many people who could not work it properly and it went wrong for them, rather than saving them money.
I also ways had a company do it for me, I got paid and they sorted out the tax man.
Good luck !
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Wed, 2007-08-22 10:46
#3
Steven Oliver
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If you use one of the "reputable" companies, the allowable expenses are plainly identified, generally they will have an agreement with the Tax man.
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Wed, 2007-08-22 10:16
#4
mark johnson
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Yes I’m finding pros and cons on both sides moreover, worryingly companies offering dispensation through them. Obviously you can only claim expenses approved by the Inland Revenue.
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Wed, 2007-08-22 10:15
#5
mark johnson
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Yes I’m finding pros and cons on both sides moreover, worryingly companies offering dispensation through them. Obviously you can only claim expenses approved by the Inland Revenue.
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Wed, 2007-08-22 09:32
#6
Steven Oliver
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Basically, with the umberella option, you are classed as an employee of the umberella company, and automatically fall within IR35. Therefore, you pay tax and NI contributions in the same way as if you were a permanent employee, although you do get to offset certain expenses against tax.
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Wed, 2007-08-22 09:13
#7
mark johnson
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So basically if your under an umbrella your IR35 safe? The question came as I have a new contract pending and wondered if these companies went through the contract to see if it was IR35.
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Wed, 2007-08-22 08:49
#8
Steven Oliver
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Actually, IR35 is a means to identify bogus self employment. If you are really self-employed and can demonstrate that your contracts fall outside of IR35, then you should have nothing to worry about.

If you want to play safe, go for an umberella option (I have used Giant in the past), but it isnt the most tax efficient option.
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Wed, 2007-08-22 08:43
#9
mark johnson
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excellant so as IR35 is specifically set up for this "loophole" so no matter how many good accountants you have mr.IR35 will come knocking and hey presto you will have 6 months to pay it all back, worryingly not many people are aware of this
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Wed, 2007-08-22 07:30
#10
Steven Oliver
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Ltd Co. Get a good accountant.
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