New Company formation

[dx4100]

Hi All

Been contracting since 2008 until COVID where I took a couple of on payroll gigs and closed my company as there was little point keeping it going at the time and it also helped clear my IR35 liability situation (although I am pretty sure I was all good - always did the right things). Company closed and it was officially dissolved August 2021 although it did do any actual trade from August 2020 onwards.

Fast forward to today and I am in a position where I want to start contracting again. I have a small contract offer which is giving me the excuse to get the a new Company formed (only 4 weeks - probably more to follow). Its a while since I formed a company and set everything up and I am trying to just do it on my own. Not quite ready to bother engaging an accountant and I don't think I need to yet (maybe after this post I change my mind). So just wanted to run a few things buy you guys to check I am not missing anything.

Link to old company

Do you think its been long enough for there not to be a link between the old company and the new company ?

Company Formation

Last time my wife was well paid and there was little point giving her a share of the business to income shift. Now she is on a very low salary and it makes sense. My understanding because we are married and living together this is fine as long as the money is paid into her own account. I presuming its fine to incorporate the company assigning her 50 shares and me 50 shares. A lot of the articles talk about "gifting' the shares but presuming just doing it at incorporation is fine as well. In reality she may do some contracting work herself in the coming year so this will save us setting up another company as well, although thats a pipe dream at the moment.

Income shifting

Apparently the money has to be hers to do with as she pleases. It would but in reality we share everything so she would transfer back into our current account to pay the bills like anything else we earn. Is this fine ?

VAT Registration

I don't know whats going happen in the coming month / year - is it worth holding off on the VAT registration or just do it now. My head says might as well hold off for now until I get a bigger contract. Can't see a downside ?

Thanks for any feedback.

[WTFH]

How did you close the old company?
What way did you distribute the remaining funds in the company?

[Lance]

Read the first timers thread to the right as most if answers your questions.

The link between new co and old co is YOU….. So yes there is a link. What are you bothered about?

As Eek says, the critical question is how did you close down old co. Google TAAR for more details. https://www.taxinsider.co.uk/living-...x-rule-part-ta

[ladymuck]

As Eek says

Who?

[northernladuk]

Who?

He meant Eek's b*tch.

[mudskipper]

Yeah I wouldn't go for 50/50 shares - you want to be in control should things go south. I've been married over 30 years with no intention of binning him, but still ensured I had control of my company.

[eek]

So out of the questions let’s start with the last first as it’s easiest.

because we sell to companies who are VAT registered, register for VAT asap. The only reason you would want to delay registration is if you sell to the general public and you don’t.

share split - up to you but 50-50% shares are awkward if you are the main earner and want control.

Money sent to the wife needs to go to the wife or at least as a separate payment if you have joint accounts.

the first question is can you start a limited company again to which the answer is we don’t have enough information as the real question is when was the money extracted from the old company, how was that extracted and was that over 2 years ago?

[Lance]

Who?

I was merely demonstrating my prescience https://forums.contractoruk.com/acco...ml#post2961700

[dx4100]

So out of the questions let’s start with the last first as it’s easiest.

because we sell to companies who are VAT registered, register for VAT asap. The only reason you would want to delay registration is if you sell to the general public and you don’t.

share split - up to you but 50-50% shares are awkward if you are the main earner and want control.

Money sent to the wife needs to go to the wife or at least as a separate payment if you have joint accounts.

the first question is can you start a limited company again to which the answer is we don’t have enough information as the real question is when was the money extracted from the old company, how was that extracted and was that over 2 years ago?

Thanks for this...

Company was officially dissolved August 2021 although it did not do any actual trading from August 2020 onwards. There was only £2361 left so this will transferred tax free from memory and was under the CTG threshold so nothing to declare. No idea what that process is called.

[dx4100]

So the splitting the shares with my wife is simply a judgement call on if she is likely to divorce me anytime soon lol. Well thats going to be an awkward conversation