Assessed as Inside from April or a Blanket Ban - it's time to leave

[SouWester]

I'd ask if you understand a dormant company. Nearly everyone that comes on here mistakes dormant for not being used.

I *think* I do... but might not. I understand it as a formal status of the company that you declare... to companies house I expect? You still have to do some minor-ish reporting and you can't make any payments out except for fines and some other specific types of payments. No dividends/invoices though. I think you also have to close any bank accounts.

This is distinct from 'not being used' which is irrelevant to HMRC and CH, they will still need you to do full reporting/accounting whether you use it or not.

How did I do?

Depending on the situation with the LTD and how you shut it down there are rules in place around length of time before you can open another, which is 2 years. It's around how the money that is extracted was taxed. If there is a tax benefit to shutting it you can't open another just like that.

I am getting a lot of benefit from this forum in a short period! Thanks for this. I did not know that at all. Looks like more research is needed.

[gnarledcontractor]

Which is a very important point and something I expect we are going to have to help people with in the coming year. Gone perm/brolly and shut ltd without thinking about the longer term implications.

The longer term implications being the TAAR legislation or that and other factors?

My accountant (and I'm really not sure I trust this piece of advice) says that there could be a case where one could make an argument that if your client blanketed you then there would not be any need for your LTD any longer and you could possibly open up another one before the 2 year term was up. IIRC - I seem to remember Maslin's mentioning something similar.

[northernladuk]

I *think* I do... but might not. I understand it as a formal status of the company that you declare... to companies house I expect? You still have to do some minor-ish reporting and you can't make any payments out except for fines and some other specific types of payments. No dividends/invoices though. I think you also have to close any bank accounts.

This is distinct from 'not being used' which is irrelevant to HMRC and CH, they will still need you to do full reporting/accounting whether you use it or not.

How did I do?

Pretty darn good to be fair. Most people assume their ltds are dormant because they don't use them so kudos for knowing better. You don't have to close the account but any transactions will make it active again so safer.. but.. Details not important at this point, just the fact you aware of it's status. You can look in to the exact details if and when you need it.

I am getting a lot of benefit from this forum in a short period! Thanks for this. I did not know that at all. Looks like more research is needed.

Transactions in securities

[northernladuk]

The longer term implications being the TAAR legislation or that and other factors?

Just the transactions in securities rules..

Transactions in securities

People are going to jump at the chance to shut their company when going inside or perm but if whatever they move to doesn't work out in the short term, particularly inside gigs, it could become an issue when trying to start a new LTD.

Just because they are going inside it doesn't mean they will be there any longer than a normal gig. I imagine we'll see a few people who have taken tax advantages when closing and are stuck wanting a company when they get an outside gig soon after.

Anything else? Christ knows. I am sure HMRC will have more surprises in store for us in the near future.

[SouWester]

I imagine we'll see a few people who have taken tax advantages when closing and are stuck wanting a company when they get an outside gig soon after.

So, don't derive any tax benefit when closing the Ltd. i.e. extract all remaining as taxable dividends and not disbursements? Surely they can't expect us to predict the future and 'know' somehow that we will want another Ltd in less than 2 years doing the same kind of thing?

I continue to be astonished at the lack of clarity in tax/corp laws. They give you a vague idea where the line is and warn you sternly that you'll get burnt if you get 'too close'... but don't tell you what 'too close' is. So, the closer you get the more risk you carry. Its like a perverse game of chicken.

Anyways... anyone gonna comment on the 'intermediary report' and relative risks of converting to umbrella/going permie?

B

[gnarledcontractor]

So, don't derive any tax benefit when closing the Ltd. i.e. extract all remaining as taxable dividends and not disbursements? Surely they can't expect us to predict the future and 'know' somehow that we will want another Ltd in less than 2 years doing the same kind of thing?

I continue to be astonished at the lack of clarity in tax/corp laws. They give you a vague idea where the line is and warn you sternly that you'll get burnt if you get 'too close'... but don't tell you what 'too close' is. So, the closer you get the more risk you carry. Its like a perverse game of chicken.

Anyways... anyone gonna comment on the 'intermediary report' and relative risks of converting to umbrella/going permie?

B

I'm not astonished by the lack of clarity at all. They are specifically designed as such to give HMRC leeway to do what they like, when they like and claim technically that this is what was meant by some throw away line in one of their manuals that some previously untested case law should be interpreted exactly as they have decided retrospectively (I think this sentence, just about makes sense...)

I believe that the risks you mention have been pretty much covered in some of the other threads by some of the more prolific posters and admins on here..

[SouWester]

I believe that the risks you mention have been pretty much covered in some of the other threads by some of the more prolific posters and admins on here..

Apologies if I have missed those, I have looked (promise). Also appreciate I am one of those newbies here, soz. I also appreciate that we're all pretty much clutching at straws (I am anyway), tho some appear to have bigger hands than others...

I guess I'm specifically interested in HOW our dear friends at HMRC might know that I was a contractor with my client and am now permanent with that client, as a trigger for an investigation.

So, distinction between trigger for an investigation, and what they might find out if they did start an investigation.

If they did investigate then they would find out, presumably. By looking at my contract and seeing the working location, clients name etc. The jig would be up, and I would be relying on the great care that my very good agency has put into the wording of my SOW contract (substitution etc).

My hypothesis though, is that HMRC will see me disappear off their 'intermediary report' and appear as an employee of some other company. No alarm bells.

Compare this to staying on their report and going from an A-D to an F, with the same agency. Was outside, now inside. Mmmm, juicy.

My hypothesis is that they would go for the hapless boob who has remained with their agency first, and not brave (foolhardy?) me who has evaded attention by courageously bending over to kiss the feet of his new corporate overlords. The report doesn't identify clients so this should not trigger an investigation.

Meh. Its all conjecture. Shame it has such real-world impacts.

[eek]

Apologies if I have missed those, I have looked (promise). Also appreciate I am one of those newbies here, soz. I also appreciate that we're all pretty much clutching at straws (I am anyway), tho some appear to have bigger hands than others...

I guess I'm specifically interested in HOW our dear friends at HMRC might know that I was a contractor with my client and am now permanent with that client, as a trigger for an investigation.

So, distinction between trigger for an investigation, and what they might find out if they did start an investigation.

If they did investigate then they would find out, presumably. By looking at my contract and seeing the working location, clients name etc. The jig would be up, and I would be relying on the great care that my very good agency has put into the wording of my SOW contract (substitution etc).

My hypothesis though, is that HMRC will see me disappear off their 'intermediary report' and appear as an employee of some other company. No alarm bells.

Compare this to staying on their report and going from an A-D to an F, with the same agency. Was outside, now inside. Mmmm, juicy.

My hypothesis is that they would go for the hapless boob who has remained with their agency first, and not brave (foolhardy?) me who has evaded attention by courageously bending over to kiss the feet of his new corporate overlords. The report doesn't identify clients so this should not trigger an investigation.

Meh. Its all conjecture. Shame it has such real-world impacts.

All conjecture but matches my expectations - the main issue is getting yourself off the intermediary report as I suspect that report will be too tempting to ignore..

[northernladuk]

So, don't derive any tax benefit when closing the Ltd. i.e. extract all remaining as taxable dividends and not disbursements? Surely they can't expect us to predict the future and 'know' somehow that we will want another Ltd in less than 2 years doing the same kind of thing?

I continue to be astonished at the lack of clarity in tax/corp laws. They give you a vague idea where the line is and warn you sternly that you'll get burnt if you get 'too close'... but don't tell you what 'too close' is. So, the closer you get the more risk you carry. Its like a perverse game of chicken.

Anyways... anyone gonna comment on the 'intermediary report' and relative risks of converting to umbrella/going permie?

B

It's not for them to advise us how to use their systems to create loopholes to use. It's there to shut something down they didn't like. The 2 year rule is to stop people were shutting their company, getting all the benefits and starting again. Clearly aggressive tax avoidance so they closed it. Bed and breakfast loans are another one that came under scrutiny.They didn't design either that rule or the offpayroll rules to dovetail, they never do. They are just rules to consider when messing out with company set ups just to suit tax situation rather than real business. Just is what it is. Bit of thought and forward planning should negate the risk really.

[min]

The agency is right, HMRC don’t care who their customers are just the contractors they pay.

and in March you will be on the agency report to HMRC with your NI number, your limited company details and a large sum on which little NI is paid
and I April you will be on the (same) agency report with the same NI number, a different company and a large NI payment.

To HMRC the end client doesn’t matter it’s the agency that ties everything together

My agency doesnt have my NIN, never asked for it. Nor for my DOB. They pay my LTD. My LTD pays me on PAYE. So there is no direct link between agency and myself. Is the above still valid?