From Ltd to Umbrella

[PhilAtBFCA]

ANSOF

Yes , that sound like a wise move. IMHO, to own and run a Limited Comapny it is important that you really want to run your own business, not just find a structure to work through, thats what a brolly is for.

Phil

[DiscoStu]

i was thinking about goin limited but i was advised that because i was a newb to contracting and i wasnt sure about commiting to a limited company straight away,that umbrella would be best and then if things pick up i can set up my own limited company.

No advert for Danbro in this one? You're slipping

[ANSOF]

i was thinking about goin limited but i was advised that because i was a newb to contracting and i wasnt sure about commiting to a limited company straight away,that umbrella would be best and then if things pick up i can set up my own limited company.

[PhilAtBFCA]

Ltd Or Umbrella

gingerjedi

I can understand how it feels when rates drop and it doesnt seem worth it, but for the sake of balance I would like to mention five things :-

1. As a ltd co - you will always be financially better off than an Umbrella both inside or outside ir35 - Its a mathamatical certainty assuming - a) your vat registered b) expenses are the same between both ( the legislation is the same so they should be ).
2. Its not just about the money - In todays regulatory environment to run a ltd co you really have to want to run your own business.
3. It will cost you money to close the company, and at the same time you will be paying for an Umbrella Service - is that not two fees ?
4. The difference between Umbrella and Ltd may not be worth it for you, but it may be worth it for soemone else, we just do the numbers !
5. Accountancy fees can be less than an Umbrella - people do not expect that in general, but it is true.

There is a spreadsheet calculator and video here which means you can test the numbers just by entering Contract Rate and Expenses. ( You do not need to give any details to download the spreadsheet ).

Phil

[gingerjedi]

I'm thinking of closing my Ltd and going brolly too, though I'll be doing it all above board.

Rates have fallen off a cliff so I see no advantage of running a Ltd when I can't get anything above £20 ph, the more you earn the more Ltd is worthwhile but it just doesn't seem worth it anymore.

[PhilAtBFCA]

Regulation 72(5)

Diestl

This article might interest you it is about how HMRC can hold you personally liable as an employee or director who has received income from which PAYE should have been deducted.

If you are not declaring and paying company taxes - it is scary stuff. If you are then it is no problem.

The article is particularly relevant to being found to be inside IR35 and closing a company or having a company with no funds in it to pay the paye owed.

Phil

[Cameron Wallace]

a friend of mine tried this and the advice he got from his accountant was that if the HMRC have deemed that you have acted fraudulently then you will be liable for the outstanding and fines (at least).

[NotAllThere]

As a shareholder you have no liability for company debts.

As a director you are required to operate the company within the law. This would be where you might come unstuck.

And as a director you can be prosecuted for tax evasion.

[tino]

Hi,

I have been contracting through my Ltd Co for 2 years, but I want to move to umbrella and close down the Ltd company. I have outstanding corp tax (and VAT etc), and have not paid these yet even though they were due a few months ago. Whats the procedure, can I just switch mid contract and then wind down or bankrupt the company? If I liquidate it can I avoid the corp tax etc?

You're playing with fire here

[sweetandsour]

I won't be opening a company again, also as its a Ltd I have no liability for the company debts etc. Or does that not apply to tax?

As a shareholder you have no liability for company debts.

As a director you are required to operate the company within the law. This would be where you might come unstuck.

[Diestl]

HMRC won't let you close until everything is paid up. You're a director, you have legal responsibilities and could be bankrupted and banned from being a director again if you are deemed to have acted irresponsibly.

I won't be opening a company again, also as its a Ltd I have no liability for the company debts etc. Or does that not apply to tax?

[Turion]

Hi,

I have been contracting through my Ltd Co for 2 years, but I want to move to umbrella and close down the Ltd company. I have outstanding corp tax (and VAT etc), and have not paid these yet even though they were due a few months ago. Whats the procedure, can I just switch mid contract and then wind down or bankrupt the company? If I liquidate it can I avoid the corp tax etc?

HMRC won't let you close until everything is paid up. You're a director, you have legal responsibilities and could be bankrupted and banned from being a director again if you are deemed to have acted irresponsibly.

[Diestl]

Hi,

I have been contracting through my Ltd Co for 2 years, but I want to move to umbrella and close down the Ltd company. I have outstanding corp tax (and VAT etc), and have not paid these yet even though they were due a few months ago. Whats the procedure, can I just switch mid contract and then wind down or bankrupt the company? If I liquidate it can I avoid the corp tax etc?