Loss of billions of pounds Tax Payers money

[taxfreemoney]

Please read through at the bottom, it shows how companies are making tax free money, which is costing billions of pounds to tax payers and so far no one is taking proper action. Inland RevenueÂ’s idea was good to encourage people to use internet, by giving the tax free incentives for online submission of PAYE returns, but they did not add any proper terms and conditions. Allot of companies have opened dummy companies to take advantage of this benefit. Fewer than 200 companies are getting away easily and claiming incentives, but companies who have opened the companies in thousands has gone to the commissioners, costing further money to tax payers. Companies who put this claim forward might win this case from commissioner because they are not doing anything wrong as Inland Revenue gave this money making option to them.

How to make £1 million tax free
Incentives for PAYE online submission:
2004-05 £250
2005-06 £250
2006-07 £150
2007-08 £100
2008-09 £75
Total £825

Open 1500 companies (excuse selling these readymade companies)

One employee put on wages for £10 in each company, so there won’t be any National Insurance deductions, only tax overpayment implication, which can be claimed by the individual in the end of the year.

First yearÂ’s cost:
Initial setup cost for that (say £20 for each company) £30,000
One person on PAYE on all the companies costing only tax, total wages cost £15,000
Other costs £1,000
Total cost: 46,000

First yearÂ’s incentives:
£250 for each company totalling £375,000

Second, third, and fourth yearÂ’s cost
£15.00 companies house cost x 1500 x 4 = £90,000
Wages £15,000 pa for 3 years = £45,000

Second, third, and fourth yearÂ’s incentives:
(£250 x 1500) + (£150 x 1500) + (£100 x 1500) =
£375,000 + £225,000 + £150,000 = £750,000

Fifth yearÂ’s cost:
£10.00 companies house cost to close these companies = £15,000
Wages £15,000

Fifth yearÂ’s incentives:
£75 for each company, £112,500

Total cost for 5 years: 211,000
Total Tax free incentives: £1,237,500
In pocket Tax free: £1,026,500

Inland Revenue issues these incentives directly to the person who fills the form R38, so no need to open the accounts for these companies.

What do you think?

[Cynic]

Undoubtedly, any scheme like this will be abused but I am sure the Inland Revenue would have factored a certain amount of this sort of thing into their calculations.

I hardly think it costs billions.

[phorosdoug]

Agreed. Tell you what, TFM, give it a try and report back when you get rich!

[The Ivy Office Ltd]

I only have one question for you

Do you like prison food?


dennis@taxesclear.co.uk

[al_eebee]

But look at
SI 2005 No 826
INCOME TAX
Income Tax (Incentive Payments for Voluntary Electronic Communication of PAYE Returns) (Amendment) Regulations 2005

which at Reg 6 amends PAYE Regs, amongst other things as follows:

(2A) An incentive payment shall not be made where a small employer—

(a) has been established,

(b) employs employees, or

(c) makes payments of PAYE income (within the meaning of section 683 of ITEPA 2003),

wholly or mainly for an impermissible purpose.

(2B) For the purpose of paragraph (2A)—

(a) a small employer is “established” where—

(i) persons enter into partnership, within the meaning of section 4 of the Partnership Act 1894, in accordance with the principles set out in section 2 of that Act,

(ii) a limited partnership is registered in accordance with the Limited Partnerships Act 1907,

(iii) a limited liability partnership is incorporated in accordance with section 2 of the Limited Liability Partnerships Act 2000 or section 2 of the Limited Liability Partnerships Act (Northern Ireland) 2002,

(iv) a company is incorporated under section 1 of the Companies Act 1985 or article 12 of the Companies (Northern Ireland) Order 1986, or

(v) an unincorporated association, or a body corporate, not falling within the previous paragraphs, is created,

and it is intended at the time of incorporation, formation or creation that it should be a small employer;

(b) a small employer is established for an impermissible purpose if it is established for the purpose of—

(i) obtaining an advantage in relation to income tax, corporation tax or national insurance contributions;

(ii) obtaining an incentive under these Regulations; or

(iii) avoiding an obligation to file a return by means of electronic communications under any enactment relating to income tax, corporation tax or national insurance.

[tax me less!]

I was recommending this when the scheme first mooted (and published precisely this plan in Taxation). It is long-since stamped out by anti-avoidance legislation, so you are years too late...