Summer 2009 Newsletter Content Pot and kettle No more stealth Pensions hit A place in the sun Ready or not... Nice motor Making allowances Good times, bad times Tax-free checkup Three square meals Funny question Dividend rules OK? Too good to be true? Pay my friend Early EIS Mind the halfpennies Just the ticket Flat rate changes Foreign Service This year, next year Partial exemption Penalties Compliance checks Under their eye Howzat? Know your rights Discipline Don't be mean Redundancy Two sorts of absence Warranties

Funny question The personal tax return and the employer's end of year return P35 have for the last two years asked whether payments have been made by a "service company". This is a worrying question, because HMR&C don't like personal service companies gaining a tax benefit by disguising employment - charging fees and paying dividends to get around PAYE and NIC. The so-called "IR35" rules charge PAYE anyway if the relationship between the worker and the client would be an employment if the personal company wasn't there. The trouble is that the question about service companies doesn't relate directly to IR35. You have to answer "yes" if you work through a company which makes most of its money by selling your services and you are a shareholder. You then separately say whether you have operated the IR35 rules - which you don't have to do if you would not be treated as an employee anyway. It's not clear what HMR&C are doing with this information. Maybe they are working on "IR35 Mark II", or they want to identify people who perhaps ought to apply the rules but don't. If you work through a company that fits their description, we can help you make sure you are applying the tax rules correctly - and prove it to the taxman if he raises any questions.