Contractor paying someone from his own limited company

[NewContractor7]

Hi, I just started my limited company. I want to pay my self employed cousin 3k for some work he will be doing for me from my limited company. Can I do this, what is could be the problem? Can I get into trouble?

Also my cousin is says that he wants to refund me the amount after some time, so he don't have to pay tax... Is this possible?

I am really new to all this and won't do this unless its safe...

Thanks

[jmo21]

Hi, I just started my limited company. I want to pay my self employed cousin 3k for some work he will be doing for me from my limited company. Can I do this, what is could be the problem? Can I get into trouble?

Also my cousin is says that he wants to refund me the amount after some time, so he don't have to pay tax... Is this possible?

I am really new to all this and won't do this unless its safe...

Thanks

The first part is fine.

After that, I don't really believe the first part.

[MrRobin]

Yes it's fine, so long as it is genuinely work for the benefit of your ltd (eg he is building you a commercial website, not painting your house) Get him to raise an invoice for the work and keep it on file as an expense.

Pay him with a cheque / bank transfer / cash. Whether he declares it as income for tax purposes is his problem, not yours.

[Wanderer]

Also my cousin is says that he wants to refund me the amount after some time, so he don't have to pay tax... Is this possible?

I really don't understand this. Your cousin does £3k worth of work in return for a loan which he pays back at some later date. So he is effectively working for free and the only benefit to your cousin is that he gets an interest free loan. If he defaults on the loan then your company has lost £3k but then again if he has done £3k worth of work then it doesn't matter, does it.

Just watch that he doesn't pull a fast one by defaulting on the loan, not paying PAYE/NI as a self employed person and leaving your company liable for PAYE/NI on the £3k when HMRC question the arrangement...

[Dearnla]

I am really new to all this and won't do this unless its safe...

Thanks

In fact, so new you are still green round the edges and no, it isn't safe.....

[cojak]

Pay your cousin his 3k and have done with it. Don't let him pull you into his hare-brained tax evasion scheme.

His tax is his problem, not yours.