two in one

[dehydratedskulls]

Hi
My first post, so please be gentle.

I have my own ltd - been running for about one year.
I pay myself 11K salary and take dividends.
My brother is also a contractor.

My question:
would it be better if he set up his own LTD or joined mine as a director/employee ?
I'm thinking of improved ir35 mitigation as well as tax benefits.

(I'm waiting on feedback from my accountant - but I also wanted other viewpoints)
Thanks!

[pmeswani]

Hi
My first post, so please be gentle.

I have my own ltd - been running for about one year.
I pay myself 11K salary and take dividends.
My brother is also a contractor.

My question:
would it be better if he set up his own LTD or joined mine as a director/employee ?
I'm thinking of improved ir35 mitigation as well as tax benefits.

(I'm waiting on feedback from my accountant - but I also wanted other viewpoints)
Thanks!

He would be better setting up his own Ltd Company. At the end of the day, if one person screws up, the whole company could end up becoming bankrupt. That would affect all the directors of the company.

[dehydratedskulls]

Thanks!

Just got this from my account:

"If your brother is carrying out the same work as you then it would be possible for him to contract through the same company. However, it can get quite complex when it comes to taking money from the company. This is because if you make him a shareholder, then every dividend the company declares needs to be issued in the ratio of the shareholding. It is therefore very hard to work out the an appropriate shareholding, as you may have different incomes each month and would therefore not receive the correct level of income.

It may therefore be easier for your brother to operate through his own limited company"

[moorfield]

My question:
would it be better if he set up his own LTD or joined mine as a director/employee ?
I'm thinking of improved ir35 mitigation as well as tax benefits.

Not really, since IR35 is applied on a per contract basis. At best it might help muddy the waters re the nature of your business.

Would keep it all separate really. Depends how well you get on with your brother.

[DaveB]

Run your own seperate companies and sub out work to eachother when you can is the best way to do it and get out of IR35.

[jmo21]

Not really, since IR35 is applied on a per contract basis. At best it might help muddy the waters re the nature of your business.

Would keep it all separate really. Depends how well you get on with your brother.

so how do "real" companies do it? never been entirely sure of this

[MPwannadecentincome]

Are you both doing the same type of work? Could you substitute for each other if the need arose?

If so then I'm guessing (but don't know for sure) this might make it easier to work under 1 ltd co - you could get your contracts written to allow your business services to be delivered by either of you - that might work?

[moorfield]

Are you both doing the same type of work? Could you substitute for each other if the need arose?

If so then I'm guessing (but don't know for sure) this might make it easier to work under 1 ltd co - you could get your contracts written to allow your business services to be delivered by either of you - that might work?

Guess it could certainly work if you were identical twins. What a great wheeze that would be.

[Cheshire Cat]

Hire your brother as an employee of your company, let him work his nuts off from dawn til dusk, and pay him min wage.
That'll teach him for breaking your Optimus Prime when you were 7.
See how he likes THEM apples.

[PhilAtBFCA]

Substitution

Are you both doing the same type of work? Could you substitute for each other if the need arose?

If so then I'm guessing (but don't know for sure) this might make it easier to work under 1 ltd co - you could get your contracts written to allow your business services to be delivered by either of you - that might work?

For substitution it should also be OK for the brother to be working through his own Ltd Co and contract to the company of dehydratedskulls.

I think you would be better off with your own company's, far more flexible from a tax planning point of view and less risk for both of you.

Phil