Institutes tackle HMRC on service companies questions

I think the difference is that Dave is unlikely to be accused of being a disguised employee because he has all the badges of trade. There is no possibility of him being accused of being a disguised employee of his many customers, whose custom he can accept or decline, who cannot in any way tell him how to do his job etc etc.
IT consultant Ltd may not be a disguised employee but he is likely to be accused of it whereas Dave is not.

My client, lets call him Dave the plumber Limited, provides the time of Dave to third parties.

Dave is the only shareholder and sole employee of the company and the company does not use sub-contractors

BUT

As the company is outside IR35 and the MSC legislation he does not need to complete that box on his P35 or his SATR for 2008.

Is that right?

Peter - you have it.

Not necessarily the same answer for the Service Co questions on Tax Return.

Its good to know that I understand the legislation...

BUT

I have a hard time seeing the difference between Dave the plumber who incorporated to save tax v. being self -employed and Mike the IT consultant who incorporated to avoid paying PAYE as an employee.

To me both situations are that the company, Dave the plumber Ltd/ Mike the IT consultant Ltd, is a service company and so should be ticking the P35 box and each director should be putting a figure in that box on his SA tax return about service companies.

There is no logic in saying that one is a service company and the other isn't.

But hey whoever said tax law was logical?

Ha!

Mark,

Your link does not appear to be working

Service company question 2008 SA return page TR4:

• If you are not sure about the question or your answer, don't fill in the box or file your return until HMRC and tax institutes offer clearer advice. **
• If you are a service company (taking service company to mean a company within IR35 or a managed service company (MSC)), await clarification on what income should be included and the legal issues are resolved by HMRC and tax institutes.
• If you know that you are not a service company (taking service company to mean a company within IR35 or a managed service company (MSC)), then it is not necessary to complete the box. You can "file your return, but you might want to put this on hold and wait for further advice from HMRC and tax institutes for peace of mind.

** You may want to take some additional professional advice if you are unsure if you are within IR35, or think that you are a boarderline case.

Nichola Ross Martin
Tax editor, AccountingWEB.co.uk