Run Ltd Company Indefinitely Whilst Working Through Brolly?

[supersteamer]

If I were to take a new inside IR35 contract PAYE or through an umbrella is there anything to stop me keeping my Ltd (with retained profit) going indefinitely alongside it with no income? Can it pay me salary between IR35 contracts (obviously would require a long gap for that to be worth it)? Can it continue to pay me small benefits such as business phone or Christmas party?

I had heard a company must become dormant if not actively trading. Is this correct - I can't see anything definite. I won't be available to take outside IR35 work if I'm already doing inside IR35 work, so how does it meet the definition of actively trading? Can I simply invest a small amount of money from time to time? Is there a limit to the number of years it can exist in this sort of limbo?

Thanks!

[ladymuck]

Yes you can keep it open. You may find that the costs associated with running it outweigh the benefits.

You may find that CoHo or HMRC contact you to say they think your company is dormant if there aren't sufficient transactions being undertaken - these transactions do not have to be sales or revenue but do have to be a bit more than paying the annual return fee to CoHo.

You can either deregister for VAT and payroll or just submit nil returns each period. If you think you're going to restart trading then it's easier to keep them (according to some sources) but it's an admin overhead you can't forget to do if you don't deregister.

[Neil@Intouch]

If I were to take a new inside IR35 contract PAYE or through an umbrella is there anything to stop me keeping my Ltd (with retained profit) going indefinitely alongside it with no income? Can it pay me salary between IR35 contracts (obviously would require a long gap for that to be worth it)? Can it continue to pay me small benefits such as business phone or Christmas party?

I had heard a company must become dormant if not actively trading. Is this correct - I can't see anything definite. I won't be available to take outside IR35 work if I'm already doing inside IR35 work, so how does it meet the definition of actively trading? Can I simply invest a small amount of money from time to time? Is there a limit to the number of years it can exist in this sort of limbo?

Thanks!

You can continue to keep the Ltd Company open alongside the inside IR35 role. You can then decide to pay salary, between contracts, but might be more tax efficient to pay dividends, as this will likely be a lower rate of tax. Certainly one to discuss with an Accountant. You can continue to claim costs that are associated with the Ltd Company and the ongoing running of this.

You don't need to become dormant if not trading. You can have an outside and an inside IR35 role take place at the same time. There are services that include both Ltd & Umbrella under one roof. You void the eligibility of entrepreneur's relief, now called business asset disposal relief (BADR) if you've not traded for 3 years or more.

[Maslins]

Yes you can keep it open. You may find that the costs associated with running it outweigh the benefits.

This.

I'd suggest you forget about dormancy. It seems to get talked about a lot by contractors who don't really understand what it means. If you still want to claim business expenses like mobile phone, then realistically you're attempting to argue the company is still trading, just temporarily has no income. Nothing wrong with that, but by definition you're therefore also arguing it's not dormant.

If you think you might revert to using the Ltd Co to invoice through within perhaps 12 months, then generally we'd suggest it's worth keeping it ticking over. Yes this will likely mean continuing to incur accountancy fees when the company isn't doing much. The accountant's work will be largely unchanged just because you stop issuing sales invoices for a few months.

If you're fairly confident you won't be invoicing via the company for >12 months, then we'd suggest probably makes sense to close the company. This will be a bit of extra one off effort (and possibly cost), and will mean you can no longer get your company to pay for things like mobile phone etc, but then the company will be gone, no further admin hassle/cost relating to it.

You can keep the company going longer term with minimal income going through it, but that brings me back to ladymuck's comment.