Product category:
Industrial consultancy services
News Release from: Esentual
Edited by the Manufacturingtalk Editorial
Team on 18 December 2006
Contractors to lose tax loophole
The biggest shake up to contracting since the introduction of IR35 was announced by the Chancellor in his Pre-Budget speech.
The biggest shake up to contracting since the introduction of IR35 was announced by the Chancellor in his Pre-Budget speech The Treasury released a report entitled 'Tackling Managed Service Companies' that spells the end of composite companies
This article was originally published on Manufacturingtalk on 6 Jan 2004 at 8.00am (UK)
Related stories
Cost-effective assembly system installed
India based Avasarala Automation, has provided cost effective solution for a compressor assembly line for air-conditioner and refrigerator system.
Nickel and cobalt producers buy latest automation
An enhanced automation system has been purchased by the world's leading producer and refiner of cobalt and the world's fifth largest producer of nickel.
The contentious use of composite companies to avoid income tax and national insurance will be closed down.
This will swell the Treasury's reserves by estimated GBP1 billion pounds.
This will have a major impact on contractors in the following fields; IT, engineering, education, healthcare and construction.
The government will force composite companies to pay PAYE and national insurance payments rather than minimum wage and the remainder paid as dividends.
This will have a major impact on managed service companies that have previously exploited this tax loop hole.
End users, agencies and contractors will need to seriously consider how they work in future to avoid considerable fines.
Freelancer's trade association, The Professional Contractors Guide (PCG) has said it has no objection to the proposal in principle.
PCG's chairman said 'It's the Chancellor's prerogative to suggest reforms that reform opportunities for tax avoidance that offer an unfair advantage'.
Meanwhile Esentual, an employment management company that operates a PAYE solution, has welcomed the news.
Mark Shiel the managing director of Esentual said 'As a company we have always embraced HMRC legislation.
We have taken on board and addressed issues such as IR35, New CIS and now we will focus on The Chancellors latest statement'.
Esentual is a legitimate PAYE solution that works within the HMRC clear guidelines and offers contractors true employee benefits such as group pension scheme, discounted private healthcare, holiday and sick pay'.
To avoid punitive back taxes, contractors need to re assess the way in which they work as a matter of urgency.
• Esentual: contact details and other news
• Email this article to a colleague
• Register for the free Manufacturingtalk email newsletter
• Manufacturingtalk Home Page
Search the Pro-Talk network of sites
