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I can't see anyone mentioning PI and liability yet. Make sure your PI insurance covers your expected turnover and that your insurer understands the risk if you go for a single co. Agents are becoming aware of the shared pot and are whining about it. You need to ensure you are covered to the appropriate amount.
As others mentioned though, you cannot over emphasise the potential for difficulty following an acrimonious split. No one wants it but you both need to be prepared.
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Previously on "Contracting Couples - How Should We Set Up A Limited Company?"
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Originally posted by northernladuk View PostThat's not expensive. That's pretty standard. Seems pretty cheap to have an accountant on tap whenever you need him for the whole year. How much would you give a client for 1200 quid? Cheap accountants cost you money, good accountants save you much more.
Don't forget it's really 20% off that ultimately.
Thanks for your advise today. Its very much appreciated.
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£1,200 pa is not expensive. If he (or she) is good, pay it. If you think £1,200 is expensive for a good accountant, try paying £400 for a bad one.
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That's not expensive. That's pretty standard. Seems pretty cheap to have an accountant on tap whenever you need him for the whole year. How much would you give a client for 1200 quid? Cheap accountants cost you money, good accountants save you much more.
Don't forget it's really 20% off that ultimately.
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Originally posted by d000hg View PostI don't know if you would expect to pay double on all fees. Your accountant may offer you some sort of deal or at the very least it is worth asking when you talk to different accountants.
He seems expensive (at £1200.00 p.a. (per company)) but he knows his stuff and was recommended to me by a friend of 20 years, who has been contracting for the past 15 years or so.
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I don't know if you would expect to pay double on all fees. Your accountant may offer you some sort of deal or at the very least it is worth asking when you talk to different accountants.
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Originally posted by ASB View PostBasically anything can potentially be a settlement. Where it is the tax consequences fall upon the settlor (the donor). HMRC have some success in establishing settlements and some notable failures.
In essence what they are trying to achieve is that you do not give away your income and those taxation consequences fall elsewhere (at a reduced rate).
e.g. employ 10 unworking members and pay them 10k a year each neatly using thier nill rate band. Then that income flow back to you.
Another example might be to have a non working partner/spouse as a 50% shareholder (potentially covered by different parts of the legislation) thus receiving half the profits. HMRC might like to view this as a settlement where it is a couple. (In effect they could use 2 x 20% tax bands).
Look up Arctic systems for some information on HMRC thinking (previous). They lost.
The old (now out of data and not updated) practitioners guide can be found here. It is worth a read to see the sort of things that HMRC have (or had) in their sights. I don't think it is something to worry about - provided you can show reasonable commercial justification for whatever you enter into.
http://webarchive.nationalarchives.g.../guide_sba.pdf
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Originally posted by ChapSmurf View Post.
We are both PMs by the way. I am a Technical PM, my partner is more Business aligned. Again, not sure if this makes a difference or not with regards to running one company.
I've been at a client where a husband and wife team did this. Though what really happened was one would work 3 days of the week at that client, the other would work 2 days per week and everyone was aware who was in when.
Here having one company would make invoicing easier than if you had 2 separate companies. However if it this starts happening on more than one contract then yes setting up as one company would be a future option.
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Originally posted by ChapSmurf View PostI keep seeing the term "settlement". Sorry if I am being stupid, but is this in reference to settlements with HMRC for things like CT and VAT? We would both register on the flat rate VAT scheme.
In essence what they are trying to achieve is that you do not give away your income and those taxation consequences fall elsewhere (at a reduced rate).
e.g. employ 10 unworking members and pay them 10k a year each neatly using thier nill rate band. Then that income flow back to you.
Another example might be to have a non working partner/spouse as a 50% shareholder (potentially covered by different parts of the legislation) thus receiving half the profits. HMRC might like to view this as a settlement where it is a couple. (In effect they could use 2 x 20% tax bands).
Look up Arctic systems for some information on HMRC thinking (previous). They lost.
The old (now out of data and not updated) practitioners guide can be found here. It is worth a read to see the sort of things that HMRC have (or had) in their sights. I don't think it is something to worry about - provided you can show reasonable commercial justification for whatever you enter into.
http://webarchive.nationalarchives.g.../guide_sba.pdf
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Originally posted by northernladuk View PostI can't believe for one minute you are going to always be on the same day rate and through the same agent. You need to think a bit longer term and a bit more realistically IMO
You also need to engage a professional and get proper advice and get it explained in detail so you fully understand it. This isn't really a decision to be made off the back of a load of people on an internet forum.
We are both PMs by the way. I am a Technical PM, my partner is more Business aligned. Again, not sure if this makes a difference or not with regards to running one company.
I have opened a can of worms by the looks of things. I now have more questions than answers, but that is a good thing of course.
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Originally posted by ChapSmurf View PostI kind of of understand IR35 from contracting before but I have a lot more to learn if truth be known. It would be differenct contracts we were on, even though we will hopefully be working for the same company. We would also be on the same day rate and this would be through the same agency, although the latter probably makes little difference.
I keep seeing the term "settlement". Sorry if I am being stupid, but is this in reference to settlements with HMRC for things like CT and VAT? We would both register on the flat rate VAT scheme.
You also need to engage a professional and get proper advice and get it explained in detail so you fully understand it. This isn't really a decision to be made off the back of a load of people on an internet forum.
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Originally posted by northernladuk View PostTo the OP. IR35 is on a contract by contract basis. Setting the business up as you suggested wouldnt make an difference if you are on different contracts. Very important to get your head around IR35 quickly.
I keep seeing the term "settlement". Sorry if I am being stupid, but is this in reference to settlements with HMRC for things like CT and VAT? We would both register on the flat rate VAT scheme.
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Originally posted by TheCyclingProgrammer View PostSo long as they are going into business as a joint venture, then any settlements noise HMRC would make would fail at the first hurdle - there wouldn't even be a "settlement" as there is no element of bounty. People, including partners and other family members, go into business all the time. Its a non-issue.
However I do not think there is a significant risk. There has to be a large area of latitude and as you quite rightly state folk go into business this way all the time.
(As it happens ex Mrs ASB held 40% of myco from when she contracted and continued to receive 40% of the dividends after she had taken a job elsewhere. In one of the investigations the inspector did ask for an explanation but having outlined how it came to be was perfectly happy)
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