my spouse joins in my ltd?

[xoggoth]

Horrid. Seems you are right tim123. You had me worried there as I have business and wife will shortly start one. However, as we each have other business partners I don't think it applies. I can put the divorce papers away.

Not sure it really makes any difference now that CT is flat rate anyway apart from complicating the paperwork. However the existence of this rule surely points to lenbod and wife using one company since there cannot be an advantage for CT purposes and two companies is just duplicating costs and paperwork.

Bit of expert advice needed. There is an online accountant that answers one quesion for five quid or something or try accountingweb.

http://www.accountingweb.co.uk/cgi-b...mat=%25o-%25B/

[IR35 Avoider]

Yes it was.

One limited, doing more than one line of business. Similar to, for example, Rank Hovis MacDougal, Virgin or ICI. Losses made by one line of business are offset against the profits of the other - e.g. Dulux makes lots of money, ChlorChems does not.

Dulux and Chlorchems sound like related types of business (pharmaceutical?) and probably aren't the same company anyway. In general I would guess the big named companies you mention are in the opposite situation to you, i.e. they go beyond having one company per business and within each business have a separate company for every minor project. For example, a family friend is COO of a mining conglomerate and his list of directorships includes 30 odd companies many of which are wholly owned subsidiaries that (judging by their names) exist only to exploit a particular parcel of land per company.

Virgin would probably be your best example, since the Virgin businesses are so diverse that the only common link is Richard Branson. But again, I doubt that Virgin Airlines, Virgin Mobile, Virgin Records and Virgin Bride (sells wedding dresses) are all one and the same company.

Let me put what it this way; I don't know when one can or can't get away with offsetting the losses of one business against profits of another, but I believe this can be a problem.

(I must try to remember it's you I've had this debate with; if it happens a third time then I'm definitely senile.)

[tim123]

May be wrong but rather doubt that linked thing if spouses have entirely separate incomes from their own contracts.

You are wrong. The companies will be linked whatever the income streams. Even if one operates as a hair dresser and the other as a nuclear scientist the companies will be linked by virtue of the spousal relationship. Most unfair I know, but that is how (I understand) it is.

tim

[lenbod]

Sorry that I am getting confused about comments. My wife and I are working in IT field. Does it mean that it would be better to let my wife join my ltd rather than setting up her own ltd?

[TheFaQQer]

Can't remember if it was you I had this argument with before, but here goes.

If investigated, will you be able to explain to the tax-man how the expenses of the business that is making losses enabled the profit-making one to make it's profit? Because if those expenses were not incurred wholly and exclusively for the purposes of trade of the profit-making business, they are not tax-deductible. (I'm assuming they are two completely different businesses, if not this doesn't apply. e.g. two contractors working for the same company is not two different businesses, but a contractor and a flower shop, say, would be.)

Anyway, don't worry, I'm sure you'll get away with it. I just like to make this point, because it came as a surprise to me that for tax purposes one legal entity can be considered to be running multiple businesses and is supposed to calculate profits separately for each.

I'm sure an accountant will chip in and explain the point I'm trying to make more correctly.

Maybe it's a question of how you define your family business; if you define it not as contractor plus flower shop, but "exploiting talents of Mr and Mrs X in any way we can think of from time to time" then suddenly it's a single business.

Yes it was.

One limited, doing more than one line of business. Similar to, for example, Rank Hovis MacDougal, Virgin or ICI. Losses made by one line of business are offset against the profits of the other - e.g. Dulux makes lots of money, ChlorChems does not.

[IR35 Avoider]

Not sure I agree with that - if one is taking a while to set up (and so running at a loss) then you may be better off offsetting the losses against the profits from the other side of the business.

Which is what I do with MrsF's business.

Can't remember if it was you I had this argument with before, but here goes.

If investigated, will you be able to explain to the tax-man how the expenses of the business that is making losses enabled the profit-making one to make it's profit? Because if those expenses were not incurred wholly and exclusively for the purposes of trade of the profit-making business, they are not tax-deductible. (I'm assuming they are two completely different businesses, if not this doesn't apply. e.g. two contractors working for the same company is not two different businesses, but a contractor and a flower shop, say, would be.)

Anyway, don't worry, I'm sure you'll get away with it. I just like to make this point, because it came as a surprise to me that for tax purposes one legal entity can be considered to be running multiple businesses and is supposed to calculate profits separately for each.

I'm sure an accountant will chip in and explain the point I'm trying to make more correctly.

Maybe it's a question of how you define your family business; if you define it not as contractor plus flower shop, but "exploiting talents of Mr and Mrs X in any way we can think of from time to time" then suddenly it's a single business.

[xoggoth]

May be wrong but rather doubt that linked thing if spouses have entirely separate incomes from their own contracts.

[TheFaQQer]

Its best to keep it separate IMHO.

Unless the business are in the same field (i.e. both IT guys) then it may be justified but having one LTD for an IT consultancy and one for a flower shop is better than having one ltd to do both.

Also if one goes tits up it doesn't take the other with it.

Not sure I agree with that - if one is taking a while to set up (and so running at a loss) then you may be better off offsetting the losses against the profits from the other side of the business.

Which is what I do with MrsF's business.

[tim123]

Its best to keep it separate IMHO.

You have to be careful with this. The companies will be 'linked' by virtue of the fact that they are owed by spouses. Certain rules apply to linked companies that don't apply to other companies. The VAT regsitration limit will, for example, be based upon joint turnover not individual turnover, though I doubt that this is an issue as you will want to register anyhow.

HTH

tim

[Sockpuppet]

Its best to keep it separate IMHO.

Unless the business are in the same field (i.e. both IT guys) then it may be justified but having one LTD for an IT consultancy and one for a flower shop is better than having one ltd to do both.

Also if one goes tits up it doesn't take the other with it.

[xoggoth]

NAA but as CT is now flat rate I cannot see how there could be more tax to pay and costs like accountants/insurance and effort of all the paperwork would not be double. Not quite sure of implications for personal tax anymore if you split income regardless of earning but you could always issue a different share type to pay dividends according to what you each earn.

[lenbod]

My spouse is going to take a contract job and currently is my company secretary without having any shares in my Ltd company. I was wondering whether it is good for her to join my Ltd as a new director or set up her own Ltd. If she joins my Ltd, we may get involved a lot of document amendment. I am not sure if it is tax efficiency as well.

Does anyone have the similar situation that husband and wife are contractors in the same Ltd company, including one of them is company secretary? Any comments!