Redundancy payments to staff when closing one's company?

[JohntheBike]

I would say that the business in that case does not need to close, merely to find a new client...

so, if YourCo were not able to find a new client, what would happen then? As I said, the crux of the recent FTT case was that circumstances out of the control of the directors forced the company to close. The company can still make its employees redundant and re-employ them at such time that it gains a new contract, if ever.

[WTFH]

so, if YourCo were not able to find a new client, what would happen then? As I said, the crux of the recent FTT case was that circumstances out of the control of the directors forced the company to close. The company can still make its employees redundant and re-employ them at such time that it gains a new contract, if ever.

The difference is between being able to find a client and being able to find business you are prepared to take on.

If the directors are convinced that they should refuse to accept or even search for certain business, then it most certainly is within their control.

[JohntheBike]

The difference is between being able to find a client and being able to find business you are prepared to take on.

If the directors are convinced that they should refuse to accept or even search for certain business, then it most certainly is within their control.

If the directors are convinced that they should refuse to accept or even search for certain business, then it most certainly is within their control

but that could equally have applied in the recent FTT case. But the FTT found in favour of the appellant and allowed redundancy payments to be claimed.

the FTT case in question -

Secretary of State for Business, Innovation and Skills v Knight UKEAT/0073/13/RN

It's actually the EAT judgement, so is case law.

[northernladuk]

but that could equally have applied in the recent FTT case. But the FTT found in favour of the appellant and allowed redundancy payments to be claimed.

the FTT case in question -

Secretary of State for Business, Innovation and Skills v Knight UKEAT/0073/13/RN

It's actually the EAT judgement, so is case law.

That's quite a different set up to us though. Very few of us pay that much and have contracts of employmeny so not that useful.

[JohntheBike]

That's quite a different set up to us though. Very few of us pay that much and have contracts of employmeny so not that useful.

granted. but it is case law and HMRC are very fond of quoting case law in their favour which is loosely connected with any argument they are having with a taxpayer.

[malvolio]

An FTT does not set case law or precedant. But that aside, you cant re-employ someone who you made redundant within a fairly long timescale, else their redundancy will be taxed at the higher rate.

[wattaj]

Interesting, if somewhat old, article by Nicola Ross-Martin on this subject: Directors: Making yourself redundant? By Nichola Ross Martin | AccountingWEB

[DaveB]

An FTT does not set case law or precedant. But that aside, you cant re-employ someone who you made redundant within a fairly long timescale, else their redundancy will be taxed at the higher rate.

Actually you can. There is no statutory period involved beyond ensuring there is no continuity of employment from en employment rights perspective. There are exceptions, such as when workers may be sent hone between jobs in the normal course of employment, but otherwise that's it. HMRC *may* look closer if they do follow up a SATR that included a VR payment but it's not a given that they will.

Can I Re-Employ Someone I Made Redundant? - The People HR Blog People HR Blog
Redundancy and re-employment waiting period - Specialist HR Solutions

In the case of contractors, if you employ your spouse and pay them a wage then you may be able to use redundancy payments to them as a way to get money out of the business tax free. A change of circumstances due to IR35 could be argued as a reasonable cause for that redundancy since with all income now going via deemed payments to the contractor there is nothing left to pay their salary.

[wattaj]

In the case of contractors, if you employ your spouse and pay them a wage then you may be able to use redundancy payments to them as a way to get money out of the business tax free. A change of circumstances due to IR35 could be argued as a reasonable cause for that redundancy since with all income now going via deemed payments to the contractor there is nothing left to pay their salary.

This is the tack that I'm currently exploring.

[JohntheBike]

This is the tack that I'm currently exploring.

which is also the point I'm making, i.e. if the company is forced to close as a result of events not under its control, are the directors entitled to redundancy payments? Note that the quoted case was in the EAT, so case law was set.