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  1. #1

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    Default Redundancy

    Hello Friends,

    I started contracting this year in March and my first one year contract ended prematurely in September. I could not find a new contract in last two months. I have no option but to go for Perm position.

    I was thinking if my business has to close down, Can I pay redundancy to the company secretory and director ( myself ) ? And if so, what are the legal hurdles and documents I need to prepare towards this.

    Thanks for your advise.

    Regards
    Last edited by Nishant; 10th October 2017 at 23:54.

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    Quote Originally Posted by Nishant View Post
    Hello Friends,

    I started contracting this year in March and my first one year contract ended prematurely in September. I could not find a new contract in last two months. I have no option but to go for Perm position.

    I was thinking if my business has to close down, Can I pay redundancy to the company secretory and director ( myself ) ? And if so, what are the legal hurdles and documents I need to prepare towards this.

    Thanks for your advise.

    Regards
    Do you have an employment contract with your company? Are you paying yourself at least NMW? If so, then possibly, but it would need to be proportionate to the salaries paid and time worked for the company. Check with your accountant.


    See http://www.rossmartin.co.uk/sme-tax-...redundancy-pay

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    No, you can't.
    Last edited by northernladuk; 11th October 2017 at 06:26.
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    Quote Originally Posted by northernladuk View Post
    No, you can't.
    Apart from those circumstances when you can, if course.

    If you have been employed for more than two years then you can receive statutory redundancy pay - but it's not payable to the self-employed, those in partnerships, or office holders who do not have an employment contract.

    There's an interesting article on Accounting Web here about it, which ends with the very sage advice:

    Each case should more properly be decided on its merits.
    Rather than making sweeping generalisations based on very little information, that sounds like good advice to me.
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    Quote Originally Posted by TheFaQQer View Post
    Apart from those circumstances when you can, if course.

    If you have been employed for more than two years then you can receive statutory redundancy pay - but it's not payable to the self-employed, those in partnerships, or office holders who do not have an employment contract.

    There's an interesting article on Accounting Web here about it, which ends with the very sage advice:



    Rather than making sweeping generalisations based on very little information, that sounds like good advice to me.

    And starts with

    "Never, ever take tax advice from the man (or woman) in the pub, unless of course you know that he or she is an experienced tax adviser." which is even better advice

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    Quote Originally Posted by mudskipper View Post
    And starts with

    "Never, ever take tax advice from the man (or woman) in the pub, unless of course you know that he or she is an experienced tax adviser." which is even better advice
    What happens if said tax adviser is suggesting you join a scheme.....

    And NLUK advice is correct based on what the OP said - he went contracting in March (started company then) contract finished early in September and now he's going permanent. Hence you don't qualify to receive (or for your company to make) redundancy payments just pay the profits (after tax) out as dividends....
    Last edited by eek; 11th October 2017 at 06:59.
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    Quote Originally Posted by TheFaQQer View Post
    Apart from those circumstances when you can, if course.

    If you have been employed for more than two years then you can receive statutory redundancy pay - but it's not payable to the self-employed, those in partnerships, or office holders who do not have an employment contract.

    There's an interesting article on Accounting Web here about it, which ends with the very sage advice:



    Rather than making sweeping generalisations based on very little information, that sounds like good advice to me.
    Very nice but this isn't one. He's put the minimum effort in to understanding how to be a contractor and he's put minimum effort in to trying to end it. He will have a standard setup so the standard advice will stand. This article covers it.

    https://www.contractorcalculator.co....d_company.aspx

    Generally you are right about the sweeping statements but he's asking a bunch of contractors not tax specialists with no details so he's getting an answer based on a pretty solid set of assumptions. Hardly a sweeping generalisation.
    Last edited by northernladuk; 11th October 2017 at 07:10.
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    Quote Originally Posted by northernladuk View Post
    Very nice but this isn't one. He's put the minimum effort in to understanding how to be a contractor and he's put minimum effort in to trying to end it. He will have a standard setup so the standard advice will stand. This article covers it.
    How do you know that? I've not read every post here, so I'm happy to concede that there may be other evidence outside this thread, but how do you know what setup the OP has? What is the standard advice? (I thought the standard advice was to ask your accountant, which is where I would start)

    HMRC say that it's possible (see here) so maybe the correct answer is "possibly, but unlikely" rather than assuming that there is no contract of employment (either actual or implied) and saying "no" outright (as explained in this article).
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    Quote Originally Posted by Nishant View Post
    Hello Friends,

    I started contracting this year in March and my first one year contract ended prematurely in September. I could not find a new contract in last two months. I have no option but to go for Perm position.

    I was thinking if my business has to close down, Can I pay redundancy to the company secretory and director ( myself ) ? And if so, what are the legal hurdles and documents I need to prepare towards this.

    Thanks for your advise.

    Regards
    I would advise you to speak to your accountant.

    If you keep your business open then you will be ready should a new contract come along before you start a permanent role.
    If you have already secured a permanent role then there is no redundancy to pay. Your company isnít closed yet, so you arenít being made redundant, you are resigning as a company director.
    And underlying all of this, donít forget you will still have to pay corporation tax and submit VAT returns, so you canít just drain all the funds out of the company. This is why you need your accountant to explain all this to you.
    Strong and Stable Moderation

  10. #10

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    He hasn't got one. Have a look at his posting history. It makes for some very odd reading as he's only just asking how to pay himself but he's already trading.

    Kinda smacks of this to be honest.

    http://www.contractorweekly.com/tax-...fers-tax-pain/
    Last edited by northernladuk; 11th October 2017 at 07:56.
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