The current debate on paying civil servnats through limited companies is about fairness, about applying tax law, about the corruption of the civil service culture and about the undermining of belief in the principle of government itself.
It is also about justice and equality.
And at a practical level it should be about collecting tax due.
As my research has shown, up to 500,000 such companies disappear a year without trace.
And in 2009-10 at least 700,000 companies sent corporation tax returns did not return them. I estimate £16 billion of tax was lost as a result.
This is also about the risk of fraud.
Which makes the case for systemic reform, including better tax regulation, company regulation and civil service regulation stronger still.
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See my comment on two posts earlier. Another open goal awaits the PLP.
i think you need to sack your spell checker !
It’s the problem of using an iPad – dire things for typing on, and almost impossible to edit on too
Sorry
I made the same point in a Tax committee at the ICAEW. Directly or indirectly from that HMRC have tightened up a little in this area, although in theory, because nobody but themselves judge thier performance in practice.
The problem with citing yourself to prove a point is when you never let anyone challenge your initial assertions which were wrong, you end up repeating wrong assertions and sound more like a politician and less like a reasonable activist.
#1. Not everybody gets paid through a consulting company, but there are people who SHOULD. I suspect you probably do – what with your book publishing, conference speaking, self promotion, and possibly even you make some time for accounting? it’s cleaner and more effective to have a consultancy above your head collecting the revenue. Why do you have a problem with this approach?
#2. To “suggest” nudge nudge wink wink that people who have consultancy holding companies are tax cheats because your “report” which was built on dodgy numbers suggests that 500k companies don’t file their taxes, is a bit of a stretch even for you. Watch me use your logic:
* we shouldn’t pay people directly because 500K people don’t pay their taxes
* we shouldn’t pay our mobile phone bill because 1 phone company avoids taxes
* we shouldn’t eat at any restaurants because some restaurants are mean to their staff
You’re basically trying to throw the baby out with the bathwater. Nice try, but it’s not an ‘argument’.
3. You’ve made the dodgy assertion that 500K companies = 16 billion in taxes evaded. This is simply not true. You’ve made this dodgy claim repeatedly. You’ve published a ‘report’ on it. But you refuse to listen to any objections to your ‘analysis’ and number crunching. If you were a scientist, this would be called non-peer edited publications – in other words, rubbish. The kind of stuff a charlatan publishes to try to get you to buy his snake oil.
I have no objection to genuine consultancy companies that pay their tax.
I object to genuine consulting companies that do not pay their tax and file their accounts.
I object to companies that disguise employments that should be subject to PAYE.
I object even more when such companies disappear without trace as the official data I assembled in my report showed they must do without HMRC ever intervening.
As for peer review – it is simply a mechanism to maintain the status quo, most especially in economics. It is a prime reason for the corruption of that profession.
And I continue to assert – as all the evidence supports my claim and no one has been able to suggest why I’m wrong – that my estimates of tax loss are right, as mounting evidence suggests to be the case.
The problems are all yours in other words and not mine.
Which is, of course, why I have changed debate on this issue. Remember before I published my work on the tax gap it was ignored. Now it is supposedly HMRC’s #1 objective. That would not have happened via a peer reviewed journal, ever. And the Treasury website did (and the archive still does document that this was due to me.
The issue of paying people through limited companies is irrelevant to the number of company tax returns that go missing. The reason is because such an intermediary is entitled to a deduction of what is known as the “deemed employment payment” which in virtually all cases would eliminate any taxable profit.
Can we please get the facts right:
1. It is not illegal to provide one’s services through a company, even if the relationship between the worker and the client would ordinarily be one of employer/employee.
2. As such, HMRC have no powers to “approve” something that is not illegal.
The worker then makes a self assessment of the deemed employment payment which basically returns him to the net position he would have been in had he been paid under PAYE.
The level of pay these top civil servants get they would be receiving SATRs anyway. If there is evidence that people are not declaring the deemed employment payment then of course they must be chased. As far as I am aware no one has provided evidence showing that these individuals are not complying with the law by reporting the DEP.
The fact this whole story has never mentioned these basic points is disgraceful. It would be nice, for a start, of you to acknowledge that points 1 and 2 above are correct. Then perhaps we can move on.
Respectfully, stop being silly.
No ’employee’ can be paid via a company without their ’employer’s’ agreement. Try doing it in a routine job. Try doing it as a teacher, for example. Yo wont be able to do so: the rules make clear it’s not possible.
So this only happens by connivance and by pretending the ’employment’ is something it is not. I call that fraud: common law, non criminal fraud, but fraud none the less. An arrangement where deception is used t secure financial advantage.
And let’s stop pretending all those paid in this way then apply IR35 rules. They don’t and you’re the disgrace for misrepresenting they do when you know this does not happen. It’s almost unknown. That’s because it would never pay for the employee to voluntarily accept the liability for employer’s NI. So stop dissembling.
The reality is dividends are almost invariably paid.
Which means CT returns are due.
And the official data I quote (that’s what it is, after all – all is PQ data) shows those returns aren’t made.
That’s fraud again.
After ignoring the injustice HMRC highlight in the first place.
The disgrace it you excuse it. That’s not just disgraceful, it’s disgusting.