Best process for closing down LTD

[Maslins]

Short answer is "no", I don't see that contractors can claim £30k tax free redundancy from their company (assuming that's what you're considering).

[JohntheBike]

Short answer is "no", I don't see that contractors can claim £30k tax free redundancy from their company (assuming that's what you're considering).

this is why given the mixed opinions I asked if there was any case law that could be referred to, which there is.

The crucial difference from your link is that the controlling director decides to close the company down. The case law lists the situation where outside issues forced the closure of the company. I think this is at the heart of the issue.

[northernladuk]

If we only had someone on the forums that had been to court about this 20 years ago to help you.

[JohntheBike]

If we only had someone on the forums that had been to court about this 20 years ago to help you.

clearly in your haste to mock me, you fail to see the significance of this case brought in June 2013 which does clarify the issue somewhat, i.e. if the company is forced to close as a result of external issues, then director employees will be entitled to redundancy payments.

[Maslins]

clearly in your haste to mock me, you fail to see the significance of this case brought in June 2013 which does clarify the issue somewhat, i.e. if the company is forced to close as a result of external issues, then director employees will be entitled to redundancy payments.

Hmmm...if you're thinking that the average contractor can say "my client insisted I went PAYE" as a valid reason for paying themselves £30k redundancy, claiming it's personal tax free whilst also getting CT relief, then I think you'll be disappointed. That might not be remotely what you're thinking, but I imagine some people reading this thread will take it that way.

[JohntheBike]

Hmmm...if you're thinking that the average contractor can say "my client insisted I went PAYE" as a valid reason for paying themselves £30k redundancy, claiming it's personal tax free whilst also getting CT relief, then I think you'll be disappointed. That might not be remotely what you're thinking, but I imagine some people reading this thread will take it that way.

well, the case that I linked to would suggest this.

Granted, individual circumstances would be taken into account, and I my case any possible redundancy payout would not be remotely of the order you suggest. However, I'd be willing to challenge HMRC over the issue, if they could not point to case law which supported their position. Given that so far, the only case law I've been made aware of is not in HMRC's favour, they may just allow it in order to prevent any case being raised in the FTT. This is how HMRC needs to be handled.

A similar strategy works well in the Small Claims Court. If you are already in a detrimental position, then suing in the SCC costs very little and the cost of defending to the respondent is often more expensive than settling the claim. So inevitably, as I've experienced, they settle without prejudice. BTW, I recently secured a CCJ against an agent of HMRC this way in the SCC.

[Maslins]

That case is statutory redundancy, which is only a non-trivial sum if you've been employed somewhere a while. IMO entirely different kettle of fish to ex gratia payments (the up to £30k tax free). When I'm saying the situations are very different it's because of that.

[JohntheBike]

That case is statutory redundancy, which is only a non-trivial sum if you've been employed somewhere a while. IMO entirely different kettle of fish to ex gratia payments (the up to £30k tax free). When I'm saying the situations are very different it's because of that.

Clearly this issue needs to be expanded further.

I would assume that statutory redundancy is payed by the state if the employer's company is insolvent and has no funds to pay the redundancy. First, is this the case? Also, if a person receives any redundancy from their employer who is not insolvent, is there a statutory element of this paid by the state?

Reading this case, I don't see the judgement is related to the fact that it was statutory redundancy being claimed. It seems to be related to the fact that the demise of the company was outside the control of the director/employees of the company and as such they were entitled to redundancy payments. Would the judgement, i.e. entitlement to redundancy, have been any different if there had been funds in the company sufficient to pay the redundancies and any creditors?

which is only a non-trivial sum if you've been employed somewhere a while.

I've been employed by MyCo for over 23 years, so clearly these issues would need to be explored, if I am presented with an April 2020 situation which is to my detriment.

[WTFH]

Clearly this issue needs to be expanded further.

I would assume that statutory redundancy is payed by the state if the employer's company is insolvent and has no funds to pay the redundancy. First, is this the case? Also, if a person receives any redundancy from their employer who is not insolvent, is there a statutory element of this paid by the state?

Reading this case, I don't see the judgement is related to the fact that it was statutory redundancy being claimed. It seems to be related to the fact that the demise of the company was outside the control of the director/employees of the company and as such they were entitled to redundancy payments. Would the judgement, i.e. entitlement to redundancy, have been any different if there had been funds in the company sufficient to pay the redundancies and any creditors?



I've been employed by MyCo for over 23 years, so clearly these issues would need to be explored, if I am presented with an April 2020 situation which is to my detriment.

If the company directors make the company insolvent without clearing their debts, the directors are responsible. E.g. if you claim to work 3 days a month, but have your wife as a full time employee, then shut the company down while trying to get us tax payers to find your fraud, you’ll not get very far.

[JohntheBike]

If the company directors make the company insolvent without clearing their debts, the directors are responsible. E.g. if you claim to work 3 days a month, but have your wife as a full time employee, then shut the company down while trying to get us tax payers to find your fraud, you’ll not get very far.

I think you are missing the point. If the company is forced to close for reasons outside of its control and there are sufficient funds to pay redundancies and creditors, why shouldn't the redundancy payments be offset against the CT bill as they would be for any other company?