Stephen HivesManaging Director| PHI InformaticsLondon, United Kingdom
About a month ago I was contacted by a company called Aston Mae who told me about a bona fide scheme that would effectively mean I only pay about 10% tax. There appear to be other companies doing much the same, such as More-Pay.com. Basically, instead of having my own company, as I do now, I become an employee of one of these companies. The company bills my client in the normal way - say £500 per day, then pays me the minimum wage, i.e. £50-ish per day and the rest is made up of what they call a "company loan" i.e. £500-£50=£450. (They take a small slice as their fee so will acti=ually be less than £450). I would pay income tax on the minimum wage and interest on the loan but thats it and at the end of the tax year the company loan is written off so I get to keep about £450-ish of the £500 per day. This sounds like tax avoidance but because it is legal, I'm told it isn't tax evasion. Is anyone else out there doing this. It seems too good to be true, so what am I missing? Saving Changes...
My accounting professor said: "Tax avoidance is the duty of every accountant and tax evasion is the only crime that has no statute of limitation attached. " If you are discovered evading taxes better have every receipt you ever claimed as a business expense. One tax evasion and the U.S. Internal Revenue Service can get a warrant to examine everything that you ever sent them and they do have the files. Saving Changes...
I would check it out with Inland Revenue, Tax people get the facts straight from the horses mouth! Is this a loop hole and is it legal I wonder! doubt it Saving Changes...
Remember - "If is sounds too good to be true it probably is!"
What if they don't write the loan off? Saving Changes...
Elizabeth HarrinDirector| RebelsGuideToPM.comLondon, England, United Kingdom
I would speak to an accountant about this. You want to be completely sure that your tax affairs are in order. Will they support you if you are subject to a tax enquiry? An alternative source of info could be someone like pcg.org.uk which is an organisation for freelancers. Saving Changes...
Anonymous
Golden rule; if it sounds to good to be true, it is. Not "it probably is", but it is.
In Canada for instance, there was a number of these loopholes. They went back almost 7 years and reassessed big offenders. It's just not worth it. Your reputation is tied to this. Saving Changes...
