We have used Go Cardless for at least 5 years. There has been the odd glitch (One or maybe two) but they have generally noticed and fixed before we did. I have to say as a small fish, having a guaranteed monthly income is reassuring. We offer additional services free if clients retain us by DD: Will writing and Estate planning and no additional charge for things like mortgage references etc. It encourages clients to sign up.
Yes I can see that no one is losing so fraud is not a major issue but I still feel, HMRC would be entitled to say this was a payment from Trading Company to the individual rather than a loan to the property company and raise a tax bill on the individual.
Thanks to everyone for their input. Based on these I will
1. Check the Land Registry for error by solicitor on the TR1
2. Have a Friendly conversation with HMRC on what we agree to be an equitable of arriving at a fair market appraisal given no money changed hands
3. If needed discuss asking a Surveyor for a retrospective valuation with the client.
We had a similar problem over 2 years. In the End HMRC accepted that where a valid contract with the company existed (Backed up by a letter from the locum agencies directors) that they would accept this as company rather than the Doctor's income. This was the majority of the income but we couldn't get similar letters of comfort from the insurance company work and so we compromised that this element would be re-assessed as the Doctors. The lesson is to place a letter on file from outset to the contracting party that they should be aware that they are contracting with the company for the Doctor's services. This is some 4 years after this initial post and there is still no test case!
We had a similar problem over 2 years. In the End HMRC accepted that where a valid contract with the company existed (Backed up by a letter from the locum agencies directors) that they would accept this as company rather than the Doctor's income. This was the majority of the income but we couldn't get similar letters of comfort from the insurance company work and so we compromised that this element would be re-assessed as the Doctors. The lesson is to place a letter on file from outset to the contracting party that they should be aware that they are contracting with the company for the Doctor's services. This is some 4 years after this initial post and there is still no test case!
We had a similar problem over 2 years. In the End HMRC accepted that where a valid contract with the company existed (Backed up by a letter from the locum agencies directors) that they would accept this as company rather than the Doctor's income. This was the majority of the income but we couldn't get similar letters of comfort from the insurance company work and so we compromised that this element would be re-assessed as the Doctors. The lesson is to place a letter on file from outset to the contracting party that they should be aware that they are contracting with the company for the Doctor's services. This is some 4 years after this initial post and there is still no test case!
I've had a reply from HMRC who are stating that their contention is not that the client was entitled to incorporate but who is entitled to the fee income. They continue to press for documentary evidence. Unfortunately as a previous contribution notes; Doctors are not the best at keeping financial records.The only thing I have are athe first minutes of the company agreeing to pay a nominal £10,000 for the client's goodwill.
HMRC also want to know how the split between continued sole trader income and Company Income was agreed.
Thanks to all the above who advised not to concede. I'll take that on board with the funds paid directly to the company and post a reply when I hear back. The reason we conceded some of the income was not the companies was that in common with many Medical Professionals, the payments were being paid directly to the client's bank without recourse to invoicing. However some of the Medical Insurers were paying the fees to his ex wife's bank account and he was unable to show any transfer of these funds to the company as he let her keep it in lieu of payments to her etc. I really couldn't see any way of defending this!
My answers
We have used Go Cardless for at least 5 years. There has been the odd glitch (One or maybe two) but they have generally noticed and fixed before we did. I have to say as a small fish, having a guaranteed monthly income is reassuring. We offer additional services free if clients retain us by DD: Will writing and Estate planning and no additional charge for things like mortgage references etc. It encourages clients to sign up.
Yes I can see that no one is losing so fraud is not a major issue but I still feel, HMRC would be entitled to say this was a payment from Trading Company to the individual rather than a loan to the property company and raise a tax bill on the individual.
Thanks to everyone for their input. Based on these I will
1. Check the Land Registry for error by solicitor on the TR1
2. Have a Friendly conversation with HMRC on what we agree to be an equitable of arriving at a fair market appraisal given no money changed hands
3. If needed discuss asking a Surveyor for a retrospective valuation with the client.
Happy Taxmas everyone!
Thanks. That is helpful. There is obviously something in the relationship between the Solicitor and client I am not being made aware of.
Thnaks for that...I had that in mind but wondered if it could be self employment as well.
Cheers
John
We had a similar problem over 2 years. In the End HMRC accepted that where a valid contract with the company existed (Backed up by a letter from the locum agencies directors) that they would accept this as company rather than the Doctor's income. This was the majority of the income but we couldn't get similar letters of comfort from the insurance company work and so we compromised that this element would be re-assessed as the Doctors. The lesson is to place a letter on file from outset to the contracting party that they should be aware that they are contracting with the company for the Doctor's services. This is some 4 years after this initial post and there is still no test case!
We had a similar problem over 2 years. In the End HMRC accepted that where a valid contract with the company existed (Backed up by a letter from the locum agencies directors) that they would accept this as company rather than the Doctor's income. This was the majority of the income but we couldn't get similar letters of comfort from the insurance company work and so we compromised that this element would be re-assessed as the Doctors. The lesson is to place a letter on file from outset to the contracting party that they should be aware that they are contracting with the company for the Doctor's services. This is some 4 years after this initial post and there is still no test case!
We had a similar problem over 2 years. In the End HMRC accepted that where a valid contract with the company existed (Backed up by a letter from the locum agencies directors) that they would accept this as company rather than the Doctor's income. This was the majority of the income but we couldn't get similar letters of comfort from the insurance company work and so we compromised that this element would be re-assessed as the Doctors. The lesson is to place a letter on file from outset to the contracting party that they should be aware that they are contracting with the company for the Doctor's services. This is some 4 years after this initial post and there is still no test case!
Sole trader or Ltd Company
Thanks for the comments above.
I've had a reply from HMRC who are stating that their contention is not that the client was entitled to incorporate but who is entitled to the fee income. They continue to press for documentary evidence. Unfortunately as a previous contribution notes; Doctors are not the best at keeping financial records.The only thing I have are athe first minutes of the company agreeing to pay a nominal £10,000 for the client's goodwill.
HMRC also want to know how the split between continued sole trader income and Company Income was agreed.
John McFarlan
Thanks to all the above who advised not to concede. I'll take that on board with the funds paid directly to the company and post a reply when I hear back. The reason we conceded some of the income was not the companies was that in common with many Medical Professionals, the payments were being paid directly to the client's bank without recourse to invoicing. However some of the Medical Insurers were paying the fees to his ex wife's bank account and he was unable to show any transfer of these funds to the company as he let her keep it in lieu of payments to her etc. I really couldn't see any way of defending this!