Credit checks for IT contractot while in IVA/Bankrupt

[Adecco]

It's possible i may have to do an IVA/bankruptcy in the future.

Has anyone here been through this as a contractor as far as credit checks are concerned?

Through an IVA i can legally remain as a director (not so through bankruptcy).But my main query is around credit checks.

Are credit checks normally done only against the directors of companies only?

My accountant told me if i wanted i could instead appoint someone else as the director and make myself an employee - (and my take home pay would remain unaffected.)

If credit checks are normally only done against the directors of the limited company being used, the obviously that is a way of avoiding a credit check.

Normally who is teh credit check done against when a contractor uses an umbrella company (thereby not a director but an employee of that company)

[Alan @ BroomeAffinity]

My accountant told me if i wanted i could instead appoint someone else as the director and make myself an employee - (and my take home pay would remain unaffected.)

Don't know about any of the rest but that's wrong. Extremely wrong.

[Adecco]

Are you sure it is wrong?
I just reread the email from my accountant and he was quite firm in his belief.

Apparently i am still able to receive dividends and a salary - the only difference is being around NI. But he was quite sure it would have a negligible impact on my take home pay.

[JRCT]

How can you receive Director's Dividends if you're not a Director?

[borderreiver]

Apparently i am still able to receive dividends and a salary.

Salary yes, dividends no if the company is insolvent, which is what I presume your OP meant.

[Adecco]

Salary yes, dividends no if the company is insolvent, which is what I presume your OP meant.

To clarify - The company is not insolvent - i personally am (or will be)

My accountant didn't state directors dividends - he just said dividends. I didn't query it past that.

But I just googled and it seems dividends are paid out to shareholders. So perhaps as an employee i would be the sole shareholder albeit not a director?

[ContrataxLtd]

To clarify - The company is not insolvent - i personally am (or will be)

My accountant didn't state directors dividends - he just said dividends. I didn't query it past that.

But I just googled and it seems dividends are paid out to shareholders. So perhaps as an employee i would be the sole shareholder albeit not a director?

Hi Adecco

In theory you could be an employee and sole shareholder and not be a director in the company, however, you would have to be careful who you picked to be the director as they would have day to day control of the company. They would decide if interim dividends are declared (and their value) although you do have a right to propose and vote on a final dividend at the AGM.

Whether this would solve your problem of credit checks in an IVA/bankruptcy I'm not sure, I would imagine that most agencies/companies would want to know who has beneficial ownership of the company (that's you) and financial institutions would definitely want to know this if the company wanted to setup a new bank account for example.

Martin
Contratax Ltd

[Rob79]

To clarify - The company is not insolvent - i personally am (or will be)

My accountant didn't state directors dividends - he just said dividends. I didn't query it past that.

But I just googled and it seems dividends are paid out to shareholders. So perhaps as an employee i would be the sole shareholder albeit not a director?

As sole shareholder and employee, for many tax purposes you would be treated as a director having control of the company, rights to income and rights to assets on a winding up.

I suggest you speak with an Insolvency expert.

I can recommend one if you PM.

(I am not that person, nor do I work for them, nor do I get a commission for referrals).

[TheFaQQer]

To clarify - The company is not insolvent - i personally am (or will be)

My accountant didn't state directors dividends - he just said dividends. I didn't query it past that.

But I just googled and it seems dividends are paid out to shareholders. So perhaps as an employee i would be the sole shareholder albeit not a director?

If you are an employee, then you need to be paid NMW, which means a salary of somewhere in the region of £12k (I'm guessing from memory).

If you aren't paying a salary at the moment, then there will be an impact on your take home because you will be paying tax and NI on that salary.

In the past, I've had some agencies asking for confirmation that I was a director of the company, so make sure that not being a director actually helps you.

Finally, you need to be careful that you aren't seen to be in control of the company if you are declared bankrupt (IIRC).

[Adecco]

Hi Adecco

In theory you could be an employee and sole shareholder and not be a director in the company, however, you would have to be careful who you picked to be the director as they would have day to day control of the company. They would decide if interim dividends are declared (and their value) although you do have a right to propose and vote on a final dividend at the AGM.

Whether this would solve your problem of credit checks in an IVA/bankruptcy I'm not sure, I would imagine that most agencies/companies would want to know who has beneficial ownership of the company (that's you) and financial institutions would definitely want to know this if the company wanted to setup a new bank account for example.

Martin
Contratax Ltd

Thanks. Its just a one man band limited company....so if i chose to go down this route i would just put a family member in as director.