Originally posted by Qdos Consulting
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IR35 Dragonfly : The fallout
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Originally posted by Qdos Consulting View PostThe tax debt lies with the limited company. HMRC would object to any winding up of the company whilst the debt remains outstanding so winding up is not an option. The impact of the debt would be offset, to a degree, by the corporation tax relief due to the deemed payment, i.e potential corporation tax repayments.Comment
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Originally posted by Lewis View PostSo what would happen in the case the company doesn't have enough funds to pay and the worked decides to no longer work for that company such that the company never has enough to pay the bill?Qdos Contractor - IR35 expertsComment
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A while back, I had a client who was a director of a company that went into liquidation owing thousands in PAYE. A fair portion of this paye was for the deductions made from my client's salary. When the company went into liquidation, they went after the individuals for the deductions made from their own individual salaries. This process was appealed on the basis that the debt was the company's but it failed because it was within the Revenue's powers.
I can't remember what legislation gave them the power and it was about 10 years back so it might have changed anyway but it is something that is worth thinking about.Comment
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Originally posted by Qdos Consulting View PostWhilst the company has funds in it, HMRC would extract what they could. In very rare instances the Revenue do have powers to raise assessments on directors to collect unpaid tax, so if the tax was substantial enough they could consider taking this route.
I'm guessing the worst that could therefore happen is you would be disqualified from being a director for 'x' amount of yearsComment
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Originally posted by dezze View PostSo if he had wound up the company before being investigated, he would have been in the clear? If this is the case (sorry if it's been discussed before) then the frequent winding up of a company and starting afresh with a new one would be advisable to contractors?Qdos Contractor - IR35 expertsComment
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Originally posted by Qdos Consulting View PostNo, invariably where a company is undergoing an IR35 enquiry HMRC are vigilent enough to object to any winding up.
Not every company is investigated every year, so if the company is closed at year end and no investigation is initiated by HMRC, is the contractor in the clear and can start up a fresh company and do the same thing next year end?Comment
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Originally posted by Weltchy View PostI thought that the taxman has to prove beyond reasonable doubt that you made the dividend payments whilst knowing that you would fall inside IR35 before he could come after you personally.
I'm guessing the worst that could therefore happen is you would be disqualified from being a director for 'x' amount of years
I would care to suggest that if there was a material amount of tax at stake & the director had the funds, HMRC would have a stab at making such a direction.Qdos Contractor - IR35 expertsComment
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Originally posted by dezze View PostSo if he had wound up the company before being investigated, he would have been in the clear? If this is the case (sorry if it's been discussed before) then the frequent winding up of a company and starting afresh with a new one would be advisable to contractors?
Im thinking this over because when you start a new co, you lose all your financial history if wanting to take out loans etc and I dont really want to do that.I couldn't give two fornicators! Yes, really!Comment
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Originally posted by BolshieBastard View PostMy accountant positively advises this as a course of action. He did say however that this could flag up the company for HMRC investigation but at the end of the day, its a numbers game.
Im thinking this over because when you start a new co, you lose all your financial history if wanting to take out loans etc and I dont really want to do that.
I guess sorting out a lifetime tracker offset mortgage would be a good idea to mitigate against that.
Taking out maximum possible divis all the time seems to be a good idea as well. Why live like a pauper to keep under the high rate threshold and build up huge company reserves if it makes it easier to get clobbered?
So you pay more tax, but at least your future exposure (at worst) will just be the NI amounts.Comment
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