Andrew Carter says:
February 20 2016 at 12:34 pm
Exactly the same sum is due?
Richard, I mentioned a company and an LLP. They both provide the same limited liability in law. Some professions cannot be companies (Lawyers and accountants for example) but bloggers and authors can choose to operate as a company or an LLP.
Operating through a Ltd company with profit distributable to a director of £70,000 then paid as salary would result in:
Employers’ NIC – £7,504
Employees’ NIC £4,521
Income tax £14,401
Net in the directors’ pocket £43,773
You need only one director/shareholder so there is no need to co-opt someone who does nothing into the business.
Choosing instead an LLP with the same £70,000 sees:
Class2 NIC – £145
Class 4 NIC £3641
Income tax £17,393
Into the Members pocket goes £48,821. Over £5k which would have gone to the government is saved.
Of course you do need another person involved to actually form an LLP. Even if that person does next to nothing and it’s a little….well some might say artificial.
Of course it’s all legal and good tax planning. Or is it avoidance? The boundaries are so grey these days.
Richard Murphy says:
February 20 2016 at 3:33 pm
Accountants can be companies
But you ignore the fact that partnerships are taxed in exactly the same way as LLPs
As are sole traders
So if the alternative was that (and it would be, for example, in my case, where an LLP was used solely to differentiate activity from my unincorporated accountancy practice) then there can be no avoidance at all, however hard you pretend
And using a structure specifically allowed by law is also quite explicitly not avoidance
So I suggest you stop making yourself look stupid
This is from the same bloke who insisted, in a lengthy report, that a Ltd company which used dividend splitting etc was indeed tax avoidance. Who insisted that the Greens were tax avoiding. When non taxation of UK dividends for someone non-resident nor domiciled in the UK is expressly allowed in law. When transfers between spouses are mentioned in law as not being taxable. That Boots was tax avoiding when deduction of interest is expressly and specifically allowed in law. That Vodafone was tax avoiding by pointing out that the CFC rules, in European law, did not apply to EU subsidiaries. That Starbucks was tax avoiding by paying a margin to the Swiss coffee bean trader, something that the law states it must actually do under transfer pricing rules, that they were tax avoiding by paying a royalty to Holland, when EU law specifically states that such royalties cannot be taxed in the UK.
And currently insists that amazon, Google and the rest are tax avoiding by selling from Ireland into the UK, something which is specifically mentioned in the very basic structure of the relevant tax treaties: yes, treaties are law.
Using a structure specifically allowed by law is also quite explicitly not avoidance
WTF has he been complaining about all these years then?