Closing old company / starting a new one

**Lance** · 18 September 2017, 10:32

Originally posted by MojoDog View Post

Hi,

I'm thinking of closing down my Ltd company and starting a new one - long story short my business scope is expanding I want to encompass this in a new company.

My current freelance contract expires in April 2018, but will probably be renewed, which is the point at which would begin the new company.

If that goes ahead, would my situation be regarded as a brand new company with a new contract?

Would the mileage allowance be "reset" and could my previous contract history be taken into account in the event of HMRC taking an interest?

For the angry people reading this, I'm waiting for a reply from my accountant but thought I would post here too, to get first hand experience from "local knowledge".

If that offends then it's probably best if you jog on ;-)

Thanks

Only 2 questions identified:
Yes - Assuming you're agent will offer your new company a contract.
No - Mileage allowance is a personal thing. How can you not know this if you're already claiming it?

EDIT: Counter-question.... Why a new LTD? What are you not sharing? It makes no sense.

**mattfx** · 18 September 2017, 10:37

Presumably because his SIC code is changing?

**northernladuk** · 18 September 2017, 10:40

Depends if you are going to claim any tax relief if you close the company doesn't it? New rules will be difficult to get around if you do?

**Lance** · 18 September 2017, 10:40

Originally posted by mattfx View Post

Presumably because his SIC code is changing?

that's the simple answer.

As for the mileage. I just noticed it's (newCO) not going to start till April, when the mileage is reset anyway. Something's not right.

**northernladuk** · 18 September 2017, 10:41

Originally posted by Lance View Post

that's the simple answer.

As for the mileage. I just noticed it's (newCO) not going to start till April, when the mileage is reset anyway. Something's not right.

Not if he's caught by the 24 month rule... And changing company won't affect that status at all.

**TheFaQQer** · 18 September 2017, 10:45

Originally posted by MojoDog View Post

Would the mileage allowance be "reset" and could my previous contract history be taken into account in the event of HMRC taking an interest?

Mileage is an annual limit, reset at the start of the tax year. So it will make no difference.

You won't be able to claim ER when you close the company down because you are continuing in the same trade (and contract!) in the new company. So you can close the company and take any reserves as a dividend or salary payment and then start the new one.

If you are working with an agency, then check with them the practicalities of changing company. If you aren't, then ensure that the client is happy with the arrangement changing.

I'd think through the practicalities carefully - even down to the level of a mobile phone, because if that's through the company then you may struggle to find a provider who will give you a contract without three months of accounts to show them.

**MojoDog** · 18 September 2017, 10:50

Thanks for all the replies :-)

**SteelyDan** · 18 September 2017, 11:18

This came up on conversation a couple of weeks ago at work with a new contractor [we were discussing the 24 month rule]. As a perm he'd apparently previously hired contractors that ended up staying in excess of 3/4 years. He was basically querying the validity of the 24 month rule. When I asked him how the contractors had got around the rule, he texted one of them there and then, who [in short] came bk & advised that he just created a new ltd co. and had the new contract put in new co name, & carried on claiming mileage etc.
Sounded like BS to me but given the initial post, then maybe that's what some ppl think they can do [& get away with it]?

**MojoDog** · 18 September 2017, 11:23

Just for clarity: The 24 month rule is not the reason why I'm thinking of changing.

Closing old company / starting a new one