Old Ltd co dormant and setup new ltd co

[sapsam]

I have been contracting in Manchester for past 3 years for the same client. I've now bought a house down south and started commuting to manchester on weekly basis.
I'm worried about IR35 implications of such a long contract, plus I would like to claim expenses for the additional travel that I will be doing commuting between MAN-LON.
I'm expecting contract renewal shortly, Can I set up a new ltd company 100% owned by my wife and leave my existing company dormant. My wife currently is employee and 30% shareholder in my existing ltd co. Will this setup help with the IR35 & Expenses?
I have asked my accountant and awaiting reply, thought I will cast the net wider to get opinion from other sources.

[TheFaQQer]

I'm worried about IR35 implications of such a long contract

Length of contract has no bearing on IR35, as long as you still aren't seen as an employee.

Can I set up a new ltd company 100% owned by my wife and leave my existing company dormant.

Yes

Will this setup help with the IR35 & Expenses?

No, it won't make any difference.

[sapsam]

Length of contract has no bearing on IR35, as long as you still aren't seen as an employee.


Yes


No, it won't make any difference.

Thanks for your quick reply, I was told If I go umbrella I will be able to claim expenses, Can I not do the same through new ltd co.?

[Sausage Surprise]

How can you claim expenses? Surely the 2 year rule applies?

[kal]

I have been contracting in Manchester for past 3 years for the same client. I've now bought a house down south and started commuting to manchester on weekly basis.
I'm worried about IR35 implications of such a long contract, plus I would like to claim expenses for the additional travel that I will be doing commuting between MAN-LON.
I'm expecting contract renewal shortly, Can I set up a new ltd company 100% owned by my wife and leave my existing company dormant. My wife currently is employee and 30% shareholder in my existing ltd co. Will this setup help with the IR35 & Expenses?
I have asked my accountant and awaiting reply, thought I will cast the net wider to get opinion from other sources.

If you've been there 3 years does the 24 month rule not mean that travel expenses are not allowable regardless of where you live?

[TheCyclingProgrammer]

If you've been there 3 years does the 24 month rule not mean that travel expenses are not allowable regardless of where you live?

Normally yes although I expect OP is wondering if changing over to a new company at renewal time would change this.

I'm not really sure what the answer is to this but I'd be surprised if that's all it took to avoid the 24 month rule. I wouldn't be surprised if it was the sort of arrangement that HMRC would try and look through if they queried it.

[northernladuk]

You won't be able to claim expenses if you only do one gig with the Umbrella company as it will be classed as your permanent (and only) work place.

Am sure when your accountant has finished banging his head on his desk he will contact you shortly.

[TheFaQQer]

Normally yes although I expect OP is wondering if changing over to a new company at renewal time would change this.

I'm not really sure what the answer is to this but I'd be surprised if that's all it took to avoid the 24 month rule. I wouldn't be surprised if it was the sort of arrangement that HMRC would try and look through if they queried it.

24 month rule is related to personal taxation, so has nothing to do with your employer or client. Since the OP has already been there for more than two years (assuming that this is more than the threshold for determining a permanent place of work), then there is nothing they can do to legally keep claiming expenses without incurring a benefit in kind.

[TheFaQQer]

Thanks for your quick reply, I was told If I go umbrella I will be able to claim expenses, Can I not do the same through new ltd co.?

Yes, you can claim expenses, in line with your employer's guidelines. This is true whether you are working through an umbrella company or your own limited company.

If the expenses are not valid business expenses, then you just make sure that you out those on your tax return as a benefit in kind and pay tax and NI on them.

[TheCyclingProgrammer]

24 month rule is related to personal taxation, so has nothing to do with your employer or client. Since the OP has already been there for more than two years (assuming that this is more than the threshold for determining a permanent place of work), then there is nothing they can do to legally keep claiming expenses without incurring a benefit in kind.

Doh - of course it is. I don't know why this didn't occur to me.

OP: to elaborate on what TheFaQQer is saying - it doesn't matter which company reimburses you for your travel costs because the relief available for travel to a temporary work place is, as TheFaQQer says, an relief you have to claim personally on your self-assessment.

Both companies can reimburse you for your travel expenses and these will be reported on your P11D. This creates a tax charge (as you enter them into your self-assessment) that can only be cancelled out by claiming equivalent relief under the business expenses section on your self-assessment.

There's nothing preventing YourCo (or YourNewCo) from continuing to reimburse you for your travel expenses regardless of the 24 month rule, but you wouldn't be able to claim any relief for these payments so you would be paying tax on it.

In short: what you want to do won't help you.