Reply to: Season ticket iR35

[BolshieBastard]

Mates season ticket is £13.5K (1st class from north Birmingham) just renewed it (outside ir35 / limited company)

Also plans to buy £5K avios points now for company flights in next year

Also plans to pay remaining 24 months car leasing costs this month in a lump sum

I asked him what happens if he needs to work inside ir35/umbrella from next month at RBS

His reply was “Finders keepers losers weepers” I’m outside now and can spend my company’s money legally as I wish.

Question 1. can he ?

If not does everyone need to stop using annual season tickets etc?

He may find the car leasing company are not keen on him ending the agreement early. In effect, he's termination the agreement early and there maybe penalty charges. Additionally, this would be classed as an early termination insofar as his credit record is concerned. If he has alreay paid over half of the agreement back, then this would be classed as a voluntary termination.

Both statuses could potentially make the interest on any future finance agreements more expensive. Some people may say an ET or VT may mean getting another future lease with the same company more difficult but Im not sure that would be the case and in any event, there are lots of lease companies out there.

Otherwise, effectively he's just taking an early draw down from his company to finance this. When he's working under IR35 in the future, he'll be taxed on that basis as I see it.

[Lockhouse]

Anyone not doing their utmost to legally bleed their company dry before shutting it down would be failing in their duties as a director.

[Lance]

And declining dividends wouldn't be?

At least share classes have been justified for other reasons.

I wasn't suggesting that at all. Just pointoing out the problem with alphabet shares.
The correct way would be to sell/gift the exisiting shares. or, oh I don't know, pay some tax on the income.
Or leave it in the company till the dust settles.

[eek]

Alphabet shares are the way to do it without transferring ownership.

The Arctic Systems test case relied entirely on the shares being equal in all ways. On that basis HMRC could argue that this is income shifting and Arctic Systems is of no relevance.

And declining dividends wouldn't be?

At least share classes have been justified for other reasons.

[Lance]

There is case law about that - such that I really wouldn't recommend that approach.

If he is going to do it he needs to use different classes of shares as the best approach.

Alphabet shares are the way to do it without transferring ownership.

The Arctic Systems test case relied entirely on the shares being equal in all ways. On that basis HMRC could argue that this is income shifting and Arctic Systems is of no relevance.

[eek]

He said he can decline his dividends


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There is case law about that - such that I really wouldn't recommend that approach.

If he is going to do it he needs to use different classes of shares as the best approach.

[GhostofTarbera]

he's going to give his wife 100% of the shares??????? That's brave...
He can still have £2k divis tax free though. And 32.5% is still less than 40%

He said he can decline his dividends


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[Lance]

His other plan (if moved to umbrella) is to stop taking dividends himself but his wife (book keeper) to max out each year until he returns to an outside position

he's going to give his wife 100% of the shares??????? That's brave...
He can still have £2k divis tax free though. And 32.5% is still less than 40%

[jamesbrown]

His other plan (if moved to umbrella) is to stop taking dividends himself but his wife (book keeper) to max out each year until he returns to an outside position




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Un-possible.

[GhostofTarbera]

His other plan (if moved to umbrella) is to stop taking dividends himself but his wife (book keeper) to max out each year until he returns to an outside position




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[Lance]

if it's a one year season ticket, and he's just finshing a one year season ticket, then surely we're entering 24-month rule territory?

[malvolio]

Surly he is still an employee of his limited company and employee of umbrella Company ??? Can you be an employee of both?


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He is an officer and shareholder of his company, I very much doubt he is an employee.

[GigiBronz]

If you are here for bad advice, here is proper one:
Ask him if he has heard of options trading over two accounting periods.
Just enough so your SIC codes don't change.

[DaveB]

Surly he is still an employee of his limited company and employee of umbrella Company ??? Can you be an employee of both?


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No reason why not. Many people hold down two jobs or more jobs with multiple employers.

BiK probably does apply, but it's an edge case and the chances of it being queried are minute.

[eek]

Surly he is still an employee of his limited company and employee of umbrella Company ??? Can you be an employee of both?


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Yes you can but that way could lead to surprising tax bills for the stupid as we discovered earlier today.

However you may have difficulty justifying a train ticket if there isn't obvious income coming in from those journeys were HMRC to come looking at expenses.