Ir35 umbrella,what happens to my ltd company

[coll]

Hi I’ve been a ltd company for many years now, I have just been offered a renewal contract under ir35 and through an umbrella company, as the contract is for a year or more there will be no money going into my ltd company account. The ltd company has a bounce back loan and a company van loan as well as various other smallish out goings, which then won’t be able to be paid. Is there some way around this?

[jamesbrown]

Way around what? Paying back your outstanding debts? Yes, make a director's loan to the company so that it can service them.

Bear in mind that a bank will treat a BBL in the same way as any other debt and will pursue it aggressively. If your company is eventually liquidated, you can expect significant scrutiny about whether you carried our your fiduciary duties and there may be a case to answer regarding personal liability, depending on what you did with the BBL and how you acted when it became clear that the company was insolvent (e.g., if you made preference payments to yourself).

Bottom line, don't think you can just walk away from this and that everything will be fine. It would be better to make every attempt to pay back the debt. The BBL may be unsecured, but it will be pursued aggressively by the bank in the first instance and then you will personally receive scrutiny under an insolvent liquidation for evidence of misfeasance.

[northernladuk]

And you need to do all of that very quickly as the client has admitted your entire contract has been inside from day one so you are potentially liable for inside tax from day one of the contract.

If this is an extention how come you have no money in the account? You must have been working for a period outside up to now?

[coll]

Hi do have some money but not enough to cover the bounce back which I took to cover lack of work during COVID thing, I work in civil engineering and it appear ( speaking to others) that virtually all contracts are now being put under ir35 so if this is the case will never get and more funds into my ltd company

[coll]

Oh and it will be a new contract and a new role so do t think it will be back dated.

[jamesbrown]

You can continue to loan your company money with your future earnings, no problem. Or you can fail to pay back the loan and cross your fingers, but you’d better have done everything by the book and, even then, you should expect the insolvency process to be an unpleasant experience. If you thought you could just walk away from this, no questions asked, you were mistaken.

[northernladuk]

Oh and it will be a new contract and a new role so do t think it will be back dated.

You said it was a renewal.

[eek]

You said it was a renewal.

Could still be the same old end client - in which case the new role will be seen by HMRC as the sham it is.