Court of Appeal ruling offers hope for UK umbrella firm workers chasing holiday pay A former worker for Pimlico Plumbers has won a case in the Court of Appeal over the right for backdated holiday pay in a case set to help employees of umbrella companies in all sectors, including information technology. Gary Smith won the right to have paid holiday backdated following a ruling from the Civil Division of the …
I would have thought the most likely outcome is that where the companies do still exist, they will simply decide to fold rather than pay out back-dated holiday pay.
Any money that does exist (and I would have thought it unlikely that there will be much) will just disappear.
The judge could find the CxO's personally, criminally, financially unable to be removed through declaring bankruptcy, liable to pay back all the money owed. Sure the business could go poof, but the C-level execs would still be on the hook. With them thus "stained" it is unlikely any other company will hire said individuals in any administrative role lest the new company get tarred with the same brush.
Yes the execs could just pack up their stuff & scarper off to somewhere without an extradition policy, but they had better hope their new cave has decent natural resources. =-Jp
*Hands you a pint*
Drink up, this world is going to hell in a handcart with greased wheels on a greased slide with a rocket booster wedged up it's arse. =-/
> I would have thought the most likely outcome is that where the companies do still exist, they will simply decide to fold rather than pay out back-dated holiday pay.
That would depend on the size of the company (i.e. revenue) vs the size of the payouts.
If it's a 100million/year company, and the payouts amount to 10million (one-off, not ongoing), is it really worth folding the company over that?
The reforms are part of the government's crackdown on so-called disguised employment, where workers behave as employees but avoid paying regular income tax and national income contributions by billing for their services through personal service companies (PSCs), which are taxed at lower corporate rates.
This lie again. There is no such thing as "lower corporate rates". Small business pays taxes as any other business (except big corporations that have means to properly avoid paying tax).
Small IT companies do nothing different than big consultancies, except thanks to IR35 they are taxed on revenue (when most clients insist on having in-scope contracts) and have become less competitive. That was the whole point - to drive out competition.
If HMRC really wanted to tackle tax avoidance, they would have looked at those big consultancies that can properly offshore any profits.
Probably a few other incentives in play.
Reputedly the IR has tried this on for years and been rebuffed. Their PAYE system is a system designed by employees on a payroll for employees on a payroll. Payrolls are what they understand.
Also the Paymaster General of the time, AKA Red Dawn, was from the left of the party. She would be unlikely to look favourably on workers who weren't unionised.
Another fallacy. Companies earn income. People earn income. The two are distinct entities when it comes to tax.
Companies declare a profit, and pay a tax on that profit. That is part of the company accounts.
People earn income, you are liable to pay income tax on all the income you make.
You cannot transfer money from one to the other without there being tax implications, especially from Company to Person, which is income, adds to your total annual income, and is taxed at the same rates as everyone else.
Dividends are paid out of post tax profits, so have already been taxed at the corporate rate. This is why they appear to get a preferential rate when added to income. But that "relief" is only equivalent to the tax already paid in the company profits. If you receive dividends over your personal tax allowance you are taxed fully on the portion over your allowance, same as all tax allowances.
Now, if you want to take "pay" out of the company without paying the appropriate income tax, be prepared for a long stay at Her Majesty's pleasure, that is tax evasion.
Sorry to hear this. I left Parasol quite a while ago due to a number of issues, so it seems they have not improved. I then moved to Contractor Umbrella who were properly excellent, but then went Ltd co. after a lengthy sabbatical from the IT industry.
Hope you get things sorted. The Contractor UK website forums are rife with posts from people having issues with Umbrellas and those Disguised remuneration schemes.
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