EXCLUSIVE – How Barclays treat their temporary workers like tax avoiding nannies

I’m sure you’ve all heard the disgraceful story that Barclays have been treating their temporary workers like nannies. I can confirm that it was no less than my good self who directly received the email from a whistleblower.

This is an excerpt from an email that was given to me by that brave person who once never worked at Barclays. Not only did she never work there, she is the same drunkard and a compulsive liar who tipped me off about the BBC. I think you will find her evidence conclusive this time.

She says that this is a genuine email from January 2001 which details how Barclays should take their temporary workers off payroll and stop paying them cash in hand. The sociopathic tax adviser has pretended that this is for benevolent reasons. But it clearly isn’t. It’s for tax avoidance purposes.

What the adviser is saying here is that they should take a temporary worker who is clearly an employee and set up a personal service company as opposed to simply paying the right amount of tax through PAYE, complying with the law as everybody else does. This is clearly morally repugnant.

This act, the act of pretending that the company is required, is an act of cheating. It is therefore illegal and therefore tax evasion and punishable by no less than 12 years in prison or hanging.

The email reads as follows:

Banks who pay their temporary workers cash in hand could be jailed for up to seven years and fined up to £5,000 following a change in in the law.

No one knows quite how many temporary workers there are in the UK, because so many are paid in this way. Most temporary workers negotiate their salaries in net terms, preferring to leave the payment of any tax and National Insurance to their employers, the bank – and they have often failed to pay some or all of the income tax due to the Inland Revenue.

But from 1 January, paying an employee cash without handing over the proper tax to the Inland Revenue became a criminal offence.

The most common way to pay tax on behalf of a nanny has been through Pay As You Earn (PAYE). This has proved expensive for banks who receive no tax benefits or reliefs – any payment comes out of the employer’s taxed income. A nanny temporary worker earning £225.80 net a week, £11,742 a year, will incur £2,153 income tax and £1,105 employee’s National Insurance, making a total £15,000 a year. In addition the parents have to pay a further £1,297 of employer’s NI, making the total cost £16,297.

Now, however, there is an alternative and legal way of making the payment – and saving money.

This may be the time to set your nanny temporary worker up in her own private limited company.

A nanny temporary worker who has her own company is free to set her own pay rate. This is very important in this alternative payment plan.

So how does it work? First you have to set up a company. As you will have to use an accountant to work this scheme, you may as well buy the company from your firm of accountants. This and all accountancy fees should cost no more than about £1,200 a year. Your nanny temporary worker has to own this company and be a director, but one of the parents should be company secretary.

They can then take responsibility for the administration. (You have to be realistic here: your nanny temporary worker may not be too keen on this part of the job.)

Once the company is set up, it bills the parents bank for the nanny’s temporary worker services. The amount billed should be just enough to cover all its costs. Using the same example as before, this total is £13,767. If you want to keep admin to a minimum, levy bills quarterly in advance. This would make each bill £3,441.75. State on the invoice that fees are not refundable. It is critical that paperwork such as invoices is done. If it is not, this scheme could be challenged as a sham, which it is not when done properly.

Your temporary worker’s nanny’s salary will now comprise two parts – salary and a dividend, both paid by the company. The salary should be just enough to make sure your nanny temporary worker has an NI credit. If she is paid £83.50 a week, she’ll pay no tax on the salary and NI of just 75p. There is no employer’s NI. The net pay is £82.75. The annual cost is £4,342. She now needs another £142.25 per week, or say £7,400 a year. This can be paid as a dividend.

Companies that make less than £10,000 of profit a year pay 10 per cent corporation tax. A dividend has a 10 per cent tax credit attached to it and a basic-rate taxpayer (which the nanny temporary worker will be) pays no additional tax on receipt of a dividend. So, the company has to have profits after 10 per cent tax of £7,400, which means pre-tax profit is about £8,225. This is used to pay the dividend and the nanny temporary worker pays no tax at all on it.

Now the company has three costs: the profits to pay the dividends, the salary and the cost of running it. These amount to £8,225, £4,342 and £1,200 respectively or a total of £13,767. Paying the same nanny temporary worker under PAYE costs £16,297, so the saving could be £2,530, after costs.

You will need some help with this. Bills have to be raised, dividends have to be paid and recorded properly, and the company will have to prepare and file accounts. So you should consult an accountant. But the scheme is legal and cost-effective at a time when there will be a clampdown on ‘cash in hand’ nannies  temporary workers. It has to be worth considering.

I have removed the names of the individuals directly involved (but one of them is Richard Murphy, the nanny tax avoidance scheme specialist). This is to give them time to do the honourable thing and kill themselves in order to save the UK the cost of a trial.

You know who you are, I trust you will do the right thing.

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One thought on “EXCLUSIVE – How Barclays treat their temporary workers like tax avoiding nannies

  1. Pingback: HSBC’s UK tax bill looks to be £2bn less than I’d expect | The Justice for Taxes Network

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