Hi All,
I'm currently competing my coursework assignment for university and would be grateful for any advice that you could give me:
" You work in the tax department of a firm of Chartered Accountants, XYZ LLP. You have been requested to prepare some calculations for one of the firm’s clients, Steven James, setting out the tax and National Insurance consequences of two courses of action that he is considering.
Steven, aged 55, is employed as an engineer and he has decided to leave his current employer on 31 March 2015. He is considering two work opportunities and wants to know the income tax and National Insurance consequences of both as well as any other tax or financial issues he should be aware of.
The first opportunity is an employment option which he would start on 6 April 2015. The second opportunity is to be self-employed which he would start on 1 April 2015.
Steven also has income from property, the tax consequences of which need to be calculated.
You should bear in mind throughout this assessment that you are employed by a reputable firm of accountants with ethical standards. If you identify any issues of ethical uncertainty in your advice, please explicitly state what these uncertainties are and what steps you suggest to resolve them."
My questions:
(1) Would I be best to set up companies in offshore tax havens in order to take advantage of zero IT, CGT and SDT?
(2) Would the consultancy business and property investment be best separated or can they be operated from just one company?
(3) What are the advantages and disadvantages of being employed and self-employed? If self-employed should Steven operate as a sole trader or limited company?
(4) Are there any non-tax considerations that I need to consider to be relevant to Steven's decision?
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Replies (14)
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please use student area
Hi also this area should really only be used for proper real life questions and queries if you would like discussion and help with homework please remove post from this area & post in students area in the discussions section of the aw site
Nobody is going to come in and tell you what to write on your own homework.
If you'd said something along the lines of "I think it should be _____ because _____" you may have had more of a chance.
It's fine to ask people to perhaps spot things that may help you, or to steer you in the right direction of where to find your information but nobody is going to spend time telling you the answers on your homework for you to just copy it down. You'll never learn anything that way.
I don't know, in......
Nobody is going to come in and tell you what to write on your own homework.
If you'd said something along the lines of "I think it should be _____ because _____" you may have had more of a chance.
It's fine to ask people to perhaps spot things that may help you, or to steer you in the right direction of where to find your information but nobody is going to spend time telling you the answers on your homework for you to just copy it down. You'll never learn anything that way.
I don't know about not learning anything, in some firms getting others to do all the work (the art of delegation) and taking credit for their work once completed may well take you far.
.
Nobody is going to come in and tell you what to write on your own homework.
If you'd said something along the lines of "I think it should be _____ because _____" you may have had more of a chance.
It's fine to ask people to perhaps spot things that may help you, or to steer you in the right direction of where to find your information but nobody is going to spend time telling you the answers on your homework for you to just copy it down. You'll never learn anything that way.
I don't know about not learning anything, in some firms getting others to do all the work (the art of delegation) and taking credit for their work once completed may well take you far.
It may take you far but doesn't necessarily mean you've learned from what you've taken credit for haha.
Agree with Kirkers
especially at this busy period of the year when most of us have to work long working hours to finish our core assignments.I doubt you would be able to get your homework done here.Good Luck !
You want to fly
(1) Would I be best to set up companies in offshore tax havens in order to take advantage of zero IT, CGT and SDT?
When you obviously cannot even walk yet.
Self-employed means just that; a soletrader. You are simply being asked to compare the differing tax and national insurance regimes that apply to employees and self-employed individuals. The possibility of incorporation might then be discussed.
Setting up companies in "offshore tax havens" does not mean that they are not liable to UK tax; HMRC might not know about them, but that does not prevent them being liable to UK tax. I do not think that there is an ethical context to tax evasion.
Comprends pas
I do not think that there is an ethical context to tax evasion.
Was there an error in there somewhere? Otherwise I don't fully understand.
Reverting to the the OP, here's the answer.
1. Employed = more tax/NI but weekends generally free
2. Self employed = usually less tax/NI but more risk, more hassle. Offshore stuff = less tax still (maybe?) but even more risk, even more hassle
The thing about age 55 might be the key, but individuals are all different.
Suggestion
Post your answers and I guess some contributors will probably comment on them.
Keep it simple!
I think that you need to focus on the basics, such as:
1) Differing NIC rates between the two.
2) Treatment of travel and other likely expenses under both scenarios.
3) Consider a ltd company for the self-employment but also consider IR35.
3) Non tax stuff about employment rights and job security.
4) The actual earnings level would in real life affect this. Is he a £150K or £40K pa engineer?
Unbelievable
Dearie me.
Your answer is ....
"I am a bone idle student. I will be unemployable."
When you've finished answering this one I've got an assignment for my Master's that I'd appreciate someone answering for me - Write a short essay of no more than 1,000 words on the Greek word adikēma (ἀδίκημα).
That's the first part - once I've got suitable answers I'll post the second part. Oh and my deadline is the first week in Feb so if you could leave those last minute tax returns and focus I'd be grateful.
Does he not....
When you've finished answering this one I've got an assignment for my Master's that I'd appreciate someone answering for me - Write a short essay of no more than 1,000 words on the Greek word adikēma (ἀδίκημα).
That's the first part - once I've got suitable answers I'll post the second part. Oh and my deadline is the first week in Feb so if you could leave those last minute tax returns and focus I'd be grateful.
Does he not play for {Insert as required}