Composite companies have given HM Revenue
& Customs headaches for years, so you would think that its big tax
crackdown on the structures would signal the beginning of the end of the
HMRC has struggled to
nail down individuals that work within composites to pay what it considers the
The move was the second largest revenue raising measure in the pre-Budget
report and will see the government rake in as much as £1bn over the next three
Individuals are classed as directors within a composite company and are paid
a small salary and a dividend, reducing their PAYE and national insurance
But as soon as HMRC attempts to catch these tax avoiders under IR35, the
composites are broken up and reformed, leaving no assets.
HMRC has formed draft legislation to hit them, but there is likely to be
months of debate and argument challenging the strategy.
The composites are not going to lay down and die,and have called the
government’s decision economically unstable and political.
Ruth Blackmore, chief executive of Safe Solutions International, says the
legislation will be disastrous for the UK economy, arguing that contractors’ tax
benefits are balanced by the temporary nature of their work.
As far as individuals with their own service companies are concerned, the
issues are unclear.Blackmore says many could be affected by this move
The CIoT’s Anne Redston believes this issue has been effectively handled in
the consultation.Grant Thornton tax partner Mike Warburton says the poor will
suffer from HMRC’s crackdown. ‘Nurses and teachers, who are on a low income,
have been hit here.’
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states