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Using a Limited Company for contracting

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    Using a Limited Company for contracting

    Please excuse me if this has been covered, but I can't find it.

    I have a well established Ltd company that is in the retail sector and runs a PAYE scheme. I own 50% & my partner owns 50%. He does some IT contacting and we invoice the client and get paid weekly. We pay VAT, NI, PAYE & Corporation Tax.

    I am told that as of yesterdays budget we can't do this because we own shares in the company and will have to use a 3rd party umbrella company? Any comments please?

    Thanks.

    #2
    Originally posted by JurassicJallopy View Post
    Please excuse me if this has been covered, but I can't find it.

    I have a well established Ltd company that is in the retail sector and runs a PAYE scheme. I own 50% & my partner owns 50%. He does some IT contacting and we invoice the client and get paid weekly. We pay VAT, NI, PAYE & Corporation Tax.

    I am told that as of yesterdays budget we can't do this because we own shares in the company and will have to use a 3rd party umbrella company? Any comments please?

    Thanks.
    If the client doesn't want limited companies in their labour supply chain that is their choice. you can either accept it and find an umbrella firm to work through or leave the contract at the end of the month.
    merely at clientco for the entertainment

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      #3
      The client is fine with it. My question was if there was an HMRC rule that because we own the limited company we could not bill the contracting through it? I have just been told this by another contractor, but I can't understand why or find anything in HMRC that confirms?

      Comment


        #4
        Originally posted by JurassicJallopy View Post
        The client is fine with it. My question was if there was an HMRC rule that because we own the limited company we could not bill the contracting through it? I have just been told this by another contractor, but I can't understand why or find anything in HMRC that confirms?
        The issue is IR35 where from April the status is determined by the end client not the contractor (as was the case before now).

        If the end client is happy that the work you do is outside IR35 you have nothing to worry about but you should ignore other people and ask the end client directly how they view the work that your partner does.

        merely at clientco for the entertainment

        Comment


          #5
          Originally posted by JurassicJallopy View Post
          The client is fine with it. My question was if there was an HMRC rule that because we own the limited company we could not bill the contracting through it? I have just been told this by another contractor, but I can't understand why or find anything in HMRC that confirms?
          If you don't understand the contract you have signed or preferably about to sign then get a contract lawyer to explain it to you as nowhere in the budget did the Chancellor say this.
          "You’re just a bad memory who doesn’t know when to go away" JR

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            #6
            Yesterday's budget has nothing to do with whether a company wants to work with a PSC or not.

            Who said exactly what to you? It's important to have the exact wording rather than an interpretation of it.

            A client can decide they don't want to directly engage a PSC - that's always been in their gift, it's just that it's now becoming more common. That means they don't have to worry about making status determinations for off-payroll workers from the next financial year. It may be that your only option to continue working with that client is to use an umbrella company.

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              #7
              I'll find out more later when I can get the exact wording of what was said. We invoice our hours to a contracting consultancy via our ltd company, they then get paid by the client and pay us. I pay VAT and then PAYE etc on what we pay ourselves. This model works nicely for us because we can both be paid and take advantage of the tax thresholds. No way do I want to have to start using an umbrella company if I don't have to...

              Comment


                #8
                Originally posted by JurassicJallopy View Post
                The client is fine with it. My question was if there was an HMRC rule that because we own the limited company we could not bill the contracting through it? I have just been told this by another contractor, but I can't understand why or find anything in HMRC that confirms?
                Doesn't matter what the client is fine with. The fee pay must carry out an assessment on the role. If it's outside then you can carry on. If the role is deemed inside you go brolly. Simple as that.

                You really should know this. It lands in four weeks, it just missed last year and it hit the PS 3 years ago. I can't see how it's possible to not know this is happening even if you don't know the details.

                Have you had your contracts reviewed for IR35 or know enough to gauge yourself? Are you on a SoW deliverables based contractor or a bum on seat?
                Last edited by northernladuk; 4 March 2021, 15:19.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

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                  #9
                  The client has provided a SDS, stating that we are off payroll. I have also run the details of the contract through CEST and also had the contract looked at by our accountant. The assumption that I am only just getting to this when it hits in 4 weeks is not correct and a tad insulting...

                  The Government document that was mentioned to me was quite quietly published on Wednesday. I have now clarified what we will be doing, with my accountant, and am comfortable that we are ok but here is the link just in case it does help anyone else.

                  Technical changes to make sure off-payroll working legislation operates as intended - GOV.UK (www.gov.uk)

                  Comment


                    #10
                    Originally posted by JurassicJallopy View Post
                    The client has provided a SDS, stating that we are off payroll. I have also run the details of the contract through CEST and also had the contract looked at by our accountant. The assumption that I am only just getting to this when it hits in 4 weeks is not correct and a tad insulting...

                    The Government document that was mentioned to me was quite quietly published on Wednesday. I have now clarified what we will be doing, with my accountant, and am comfortable that we are ok but here is the link just in case it does help anyone else.

                    Technical changes to make sure off-payroll working legislation operates as intended - GOV.UK (www.gov.uk)
                    That link covers the changes that the Government have had to be made because the original April 2020 rules made it impossible for an Agency to offload employment to an umbrella company. It really is just a technical change that doesn't impact the IR35 rules - just makes then usable without screwing more people up.

                    merely at clientco for the entertainment

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