An agent recently advised that they are unable to do business with a contractor whose LTD company has more than one Director. The agent has requested he remove one director before being able to proceed.
Below is the reasoning provided from the agent (company name removed). Has anyone else has this issue recently?
‘XXXX have strict compliance policies and require all contractors operating through their own limited company to comply with applicable law. XXXX’ compliance department works alongside XXXX’ lawyers and tax advisors to set and enforce minimum standards which we expect all our own limited contractors to meet.
One of these minimum standards is that each own limited company contractor is the sole director and shareholder of their own limited company this is because multiple directors or shareholders may be an indicator that a contractor is operating a tax avoidance scheme. The correct amount of tax depends on whether the individual genuinely controls the limited company they offer their services through, if the individual is not the sole director or shareholder of the limited company then this suggests that they have split control over the company and should be paying a higher rate of tax (equivalent to that of an employee).
Tax debt transfer provisions under the Income Tax (Earnings and Pensions) Act (as amended) means that the tax authorities may try to recover the tax the limited company has failed to pay from XXXX in certain circumstances. This is not a risk that XXXX can afford to take which is why we have a sole shareholder and director requirement. ‘
Below is the reasoning provided from the agent (company name removed). Has anyone else has this issue recently?
‘XXXX have strict compliance policies and require all contractors operating through their own limited company to comply with applicable law. XXXX’ compliance department works alongside XXXX’ lawyers and tax advisors to set and enforce minimum standards which we expect all our own limited contractors to meet.
One of these minimum standards is that each own limited company contractor is the sole director and shareholder of their own limited company this is because multiple directors or shareholders may be an indicator that a contractor is operating a tax avoidance scheme. The correct amount of tax depends on whether the individual genuinely controls the limited company they offer their services through, if the individual is not the sole director or shareholder of the limited company then this suggests that they have split control over the company and should be paying a higher rate of tax (equivalent to that of an employee).
Tax debt transfer provisions under the Income Tax (Earnings and Pensions) Act (as amended) means that the tax authorities may try to recover the tax the limited company has failed to pay from XXXX in certain circumstances. This is not a risk that XXXX can afford to take which is why we have a sole shareholder and director requirement. ‘
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