Umbrella -> Limited

**northernladuk** · 17 February 2014, 23:35

Well IR35 doesn't apply to Umbrellas as you are in employment with them so not sure why you are asking.

You can also only be caught by IR35 if you are running your finances the opposite to what the working practice/contract says. If both are outside and you run paye/divis then what is there to get caught for?

What do you mean 'caught by IR35?' anyway. Are you inside or outside and accounting the correct way?

QDOS should review your contract/practices and give you a recommendation. You run your books based on this and there is no problems.

I asked why you were posting professional questions in General and not in the prof forums and think I should have kept my mouth shut.

**mickey** · 18 February 2014, 07:16

Originally posted by northernladuk View Post

Well IR35 doesn't apply to Umbrellas as you are in employment with them so not sure why you are asking.

You can also only be caught by IR35 if you are running your finances the opposite to what the working practice/contract says. If both are outside and you run paye/divis then what is there to get caught for?

What do you mean 'caught by IR35?' anyway. Are you inside or outside and accounting the correct way?

QDOS should review your contract/practices and give you a recommendation. You run your books based on this and there is no problems.

I asked why you were posting professional questions in General and not in the prof forums and think I should have kept my mouth shut.

You've asked a fair question

Now, assuming contract+working practices are validated, would hmrc not be interested in the reason for going limited while being engaged with the same client, no break in between, and how would this impicate ir35?

**Clare@InTouch** · 18 February 2014, 08:41

Originally posted by mickey View Post

You've asked a fair question

Now, assuming contract+working practices are validated, would hmrc not be interested in the reason for going limited while being engaged with the same client, no break in between, and how would this impicate ir35?

IR35 is based on working practices. Going from brolly to limited is a commercial decision that would have no impact on how you do the contract work.

Most people leave swapping over until they start a new contract as they can get everything set up in the break, and it gives a clean start.

HMRC can resurrect a dead company in cases of fraud.

**chubba** · 18 February 2014, 09:22

Originally posted by mickey View Post

You've asked a fair question

Now, assuming contract+working practices are validated, would hmrc not be interested in the reason for going limited while being engaged with the same client, no break in between, and how would this impicate ir35?

They would only know this if you were investigated. They don't know who your clients are so the change to using a brolly won't even register with them I would imagine.

Clare - what do you make of this article? In your opinion does closing down a company increase the chances of investigation?
Contractors' Questions: Can I dodge IR35 by winding up? :: Contractor UK

**northernladuk** · 18 February 2014, 09:23

Don't forget the issues with expenses and the client being a permanent place of work when you with brolly...

**Clare@InTouch** · 18 February 2014, 09:35

Originally posted by chubba View Post

Clare - what do you make of this article? In your opinion does closing down a company increase the chances of investigation?
Contractors' Questions: Can I dodge IR35 by winding up? :: Contractor UK

It's a good article, and I agree with the comments. That said, I've not seen HMRC re-open a company in practice, or had a closure trigger an investigation. But then we follow a set procedure to ensure all taxes are paid and tax schemes closed before we would apply for striking off, so that side of things isn't an issue. Owing money to HMRC and/or not filing documents on time is probably the best way to ensure you get an investigation, not the closure itself.

**northernladuk** · 18 February 2014, 09:43

Originally posted by Clare@InTouch View Post

It's a good article, and I agree with the comments. That said, I've not seen HMRC re-open a company in practice, or had a closure trigger an investigation. But then we follow a set procedure to ensure all taxes are paid and tax schemes closed before we would apply for striking off, so that side of things isn't an issue. Owing money to HMRC and/or not filing documents on time is probably the best way to ensure you get an investigation, not the closure itself.

To be fair I would have thought you wouldn't expect to see any as you work with people that make an effort to comply etc. The people that would suffer this are ones that either tend to do it themselves or have bad accountants? I dunno how other long standing posters see it but there does seem to be a lot more posts about how to screw their LTD's. Maybe due to the offshoring phenomenon over the last few years making more people redundant so a raft of new contractors that don't understand or care about the business aspect. I would have thought it is slowly rising in importance on HMRC's radar and will get picked up on at some point in the future.

**Martin at NixonWilliams** · 18 February 2014, 09:55

Originally posted by Clare@InTouch View Post

It's a good article, and I agree with the comments. That said, I've not seen HMRC re-open a company in practice, or had a closure trigger an investigation. But then we follow a set procedure to ensure all taxes are paid and tax schemes closed before we would apply for striking off, so that side of things isn't an issue. Owing money to HMRC and/or not filing documents on time is probably the best way to ensure you get an investigation, not the closure itself.

Same here - We prepare letters for our clients to send on to HMRC informing them of their intention for the company to be struck off and I'm yet to see HMRC launch an enquiry as a result.

I agree that good behaviour in terms of filing returns & paying taxes will definitely help you. Having said that, the latest IR35 enquiries we have had seem to be for 'good' clients.

Martin

**Clare@InTouch** · 18 February 2014, 10:01

Originally posted by northernladuk View Post

To be fair I would have thought you wouldn't expect to see any as you work with people that make an effort to comply etc. The people that would suffer this are ones that either tend to do it themselves or have bad accountants? I dunno how other long standing posters see it but there does seem to be a lot more posts about how to screw their LTD's. Maybe due to the offshoring phenomenon over the last few years making more people redundant so a raft of new contractors that don't understand or care about the business aspect. I would have thought it is slowly rising in importance on HMRC's radar and will get picked up on at some point in the future.

Exactly. The people who are more likely to get in trouble are those who either owe money due to overpaid dividends or those that bury their heads in the sand (intentionally or not) and then try to close the company themselves without following the proper process. An accountant will charge you extra to close a company, but there's a very good reason for that - it takes time and it has to be done properly. Try to strike off when a CT scheme isn't clear and closed for example and HMRC's little furry ears will prick up and they may well take a closer look.

Umbrella -> Limited