Pension contribution and corporation tax questions

[WTFH]

Andy, just asking for a friend, but is there a reason why you stopped posting as Ian2013?

https://www.contractoruk.com/forums/...any-funds.html

https://www.contractoruk.com/forums/...ml#post2752960

[Lance]

I had a similar issue and my accountant argued against it. Making contributions after you have ceased trading would not be an allowable expense against profits as it's not seen as being done for the purposes of trade. And that was only a month after I had last invoiced. Seemed harsh but I went with it in the end.

"cessation of trading", and "having no revenue" are separate and unrelated things..... #justsaying

[rootsnall]

I had a similar issue and my accountant argued against it. Making contributions after you have ceased trading would not be an allowable expense against profits as it's not seen as being done for the purposes of trade. And that was only a month after I had last invoiced. Seemed harsh but I went with it in the end.

[WordIsBond]

If you are giving us the whole story, your accountant is almost certainly incorrect. There may be a risk of it triggering an investigation but that also seems doubtful. You certainly can make contributions this year, just because your company doesn't have income doesn't mean it doesn't need to compensate its staff, including directors. And if you and your company agree to being compensated by pension contributions rather than salary, that should be irrelevant to HMRC.

You can carry back the loss to last year and claim against the prior year's corporation tax, if you made a profit in that year. You can only carry back a loss one year.

[northernladuk]

What were the issues with that person using umbrella?

His gig evaporated and I think he had the opportunity for an outside gig. We do temp gigs so I don't really understand why some people think moving to a brolly is a long term thing. It's just another gig, just with different remuneration method. Most people will want to go back outside at some point.

[Andy2020]

If you get tax relief shutting down the company you won't be able to open another one for two years.

Are you sure you are going to be with a brolly for the next two years? At least one person on here has already fallen foul of this just a month in.

What were the issues with that person using umbrella?

[Andy2020]

What does your company's accountant say?

My accountant tole me that given my company didn't have any income for the current year, so it cannot pay pension. But I read it in this site someone said that's allowable. So I am confused as to where to find the truth.

For point 2 and 3, I asked recently, but my accountant somehow went into 'hibernate' mode, and didn't bother replying. Hence posting the questions here.

[northernladuk]

If you get tax relief shutting down the company you won't be able to open another one for two years.

Are you sure you are going to be with a brolly for the next two years? At least one person on here has already fallen foul of this just a month in.

[eek]

Recently I had to take an insider IR35 contract via an umbrella, so I am thinking of closing down my company in the near future and take the entrepreneurs relief. But I would like to use my company funds to make contributions to my pension before shutting down the company. I have had some pensions from my pervious permie roles years ago but never paid any contributions since. I understand that my company can pay into a pension 40k each year and carry forward the previous three tax years. The tricky thing is that in my current company accounting year (November 2019), my company has had no income due to me being out of contract and it doesn't look like going to have any income for the whole accounting year as I am now using an umbrella. Someone told me that I am likely to run into the following troubles:

1. Given my company has not got any income this year, it won't be allowed to pay any contributions from retained fund as pension contributions can only be from the current year's income.
Is this true?

2. If I pay 3 or 4 years contributions, it will cause a massive loss to the current accounting year, then it may trigger an inland revenue enquiry, particularly if I close down the company shortly after as the payment may be regarded as not wholly and exclusively for keeping the company trading, instead, it is effectively paying for the company to ceasing trading.
How true is this? If I delay the company closure, will that help to mitigate this risk?

3. If the above two were both false, will I be able to claim any past corporation tax rebates for the loss in the current year? My last year's account has not been submitted and corporation tax for the last year has not been paid yet.

What does your company's accountant say?

[Andy2020]

Recently I had to take an insider IR35 contract via an umbrella, so I am thinking of closing down my company in the near future and take the entrepreneurs relief. But I would like to use my company funds to make contributions to my pension before shutting down the company. I have had some pensions from my pervious permie roles years ago but never paid any contributions since. I understand that my company can pay into a pension 40k each year and carry forward the previous three tax years. The tricky thing is that in my current company accounting year (November 2019), my company has had no income due to me being out of contract and it doesn't look like going to have any income for the whole accounting year as I am now using an umbrella. Someone told me that I am likely to run into the following troubles:

1. Given my company has not got any income this year, it won't be allowed to pay any contributions from retained fund as pension contributions can only be from the current year's income.
Is this true?

2. If I pay 3 or 4 years contributions, it will cause a massive loss to the current accounting year, then it may trigger an inland revenue enquiry, particularly if I close down the company shortly after as the payment may be regarded as not wholly and exclusively for keeping the company trading, instead, it is effectively paying for the company to ceasing trading.
How true is this? If I delay the company closure, will that help to mitigate this risk?

3. If the above two were both false, will I be able to claim any past corporation tax rebates for the loss in the current year? My last year's account has not been submitted and corporation tax for the last year has not been paid yet.