Reply to: Contractor (ltd) considering umbrella - What to do with limited company

[adubya]

I don't think that's what was being referred to. See this thread/post (point 3):

https://www.contractoruk.com/forums/...ml#post2499505

and

https://www.contractoruk.com/forums/...y-pension.html

Exactly

[Paralytic]

There will still be other costs incurred for accountancy, insurance, web hosting, subscriptions etc. Not much but it adds up over time and it's worth accounting for.

I don't think that's what was being referred to. See this thread/post (point 3):

https://www.contractoruk.com/forums/...ml#post2499505

and

https://www.contractoruk.com/forums/...y-pension.html

[DaveB]

Get advice on incurring a trading loss due to pension contributions. Seems to be a grey area.

There will still be other costs incurred for accountancy, insurance, web hosting, subscriptions etc. Not much but it adds up over time and it's worth accounting for.

[adubya]

It can carry on making pension contributions from retained profits and it's there if I pick up work on the side that doesn't get caught under the post April rules. If it makes a net loss as a result then that can be carried back to the previous year for a rebate.

Get advice on incurring a trading loss due to pension contributions. Seems to be a grey area.

[DaveB]

Personally I'll be keeping my Ltd ticking over if I end up working via a brolly etc.

It can carry on making pension contributions from retained profits and it's there if I pick up work on the side that doesn't get caught under the post April rules. If it makes a net loss as a result then that can be carried back to the previous year for a rebate.

As and when I get back to working outside (it will happen eventually as it has in the public sector) then there are funds available to pay dividends to maintain cash flow while I wait for invoices to be paid.

[cojak]

Until April next year, any diligent contractor can face down an investigation.

They will have had all of their contracts reviewed, their working practices are outside IR35 and they have evidence to prove it, and they are insured,

With that in place, no-one should worry when they go through MVL.

[Maslins]

The win for HMRC has always been a mixture of forcing / scaring people in Umbrellas - their weapon for this are investigations. Regardless if they win or lose they create fear by doing investigations. And that tax take is much more than modest gains by forcing / scaring thousands of contractors into umbrellas.

Agreed...so if lots of Ltd Co contractors are already moving to umbrellas/permie anyway, it surely eliminates that motive?

There will likely be lots of closures over the next 6-12 months. HMRC won't be able to rush through one massive high profile case in the first month of that time window as a precedent to scare the others. Any case will take years. So they'd basically need to challenge every case, which would cost them huge sums, and no guarantee they'd win (m)any of them. Given after the next 12 months the numbers of contractors going through MVLs will likely plummet, any added fear element is largely irrelevant.

[dx4100]

*barrel?

I personally don't think you're right on this. I've explained why in another thread recently, but in short, it's not worth their while. Lots of effort, for individually modest gains (at best).

Isn't every IR35 win for HMRC in the end modest gains (actually tiny) in regards to the money raised from that investigation...

The win for HMRC has always been a mixture of forcing / scaring people in Umbrellas - their weapon for this are investigations. Regardless if they win or lose they create fear by doing investigations. And that tax take is much more than modest gains by forcing / scaring thousands of contractors into umbrellas.

[Maslins]

If I was HMRC any one man band company that was requesting an MVL early next year - would go right to the top of my IR35 investigations list

Shooting fish in a barrow

*barrel?

I personally don't think you're right on this. I've explained why in another thread recently, but in short, it's not worth their while. Lots of effort, for individually modest gains (at best).

[GhostofTarbera]

My general view would be to keep the company ticking over a short while, until you're more confident of the future of your umbrella role. If 3 months in you're happy with them, they're happy with you, and you think you'll be there a year plus, I'd suggest closing (probably via an MVL based on numbers quoted) would make sense.

If I was HMRC any one man band company that was requesting an MVL early next year - would go right to the top of my IR35 investigations list

Shooting fish in a barrow


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[SBK1972]

My general view would be to keep the company ticking over a short while, until you're more confident of the future of your umbrella role. If 3 months in you're happy with them, they're happy with you, and you think you'll be there a year plus, I'd suggest closing (probably via an MVL based on numbers quoted) would make sense.

Thanks for your help guys. Yes obviously I have an accountant and have asked him the same question but his reply was confusing and he literally charges me per a minute :-) I find this group / forum far more informative, helpful and I tend to wise up here then Im in a better position to discuss with him.

SBK

[Maslins]

My general view would be to keep the company ticking over a short while, until you're more confident of the future of your umbrella role. If 3 months in you're happy with them, they're happy with you, and you think you'll be there a year plus, I'd suggest closing (probably via an MVL based on numbers quoted) would make sense.

[Paralytic]

If I keep my ltd company going, although doormant, would I still need my accountant to submit my books / account costs ? Do i still need employer insurance ? IPSE insurance ? What about my wife and her shares ?

You're already paying an accountant - you should ask them this.

But, yes, while the company is alive (whether "dormant" or not), it will still incur fees (unless your accountant decides to do otherwise). Only you can decide if you want to keep insurances/memberships alive based on your risk appetite.

If you close the company, the shares go away.

If you do close it, review the many threads here on the best way to extract your £75K in the most tax efficient way: pension contributions, dividends, MVL with Entrepreneurs Relief. If you can get the balance below £25K with pension contributions and dividends, you may not need an MVL.

[GhostofTarbera]

Have all your contracts been outside so far ? If you continue in same role and suddenly go inside - prepare HMRC to come calling and class you inside for past projects


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[SBK1972]

Hi,

You could close your company through MVL and apply ER to the capital gain provided you meet the criteria AND don't return to carrying on the same, or a similar trade or activity through another PSC, partnership or self-employment vehicle in the two years following the liquidation of your company.

You could also keep the company in an inactive state while you work through an Umbrella or take on a permie role. This may be more suitable if you're not sure how long that will last or whether you'll return to contracting through a PSC in the next 24 months.

We help our customers with this by offering our Freeflex option. This allows customers to switch between operating through their PSC and using an Umbrella solution smoothly and without charging additional fees. We continue to file statutory returns for the company during times when customers use the Umbrella meaning that when they are ready to switch back, the company is live and ready to go without any admin catchup!

Hi Patrick,

so, it sounds like I need to ask myself what I plan to do in the future. If the `opt in` role is for a year and afterwards if I plan to go for `opt out` roles. The current `opt in` role could last for 3 years, and if that is the case sounds like I need to close off my company.

If I keep my ltd company going, although doormant, would I still need my accountant to submit my books / account costs ? Do i still need employer insurance ? IPSE insurance ? What about my wife and her shares ?

Sounds like the best route is to close it down.

SBK