Reply to: Company willing to pay my Corporation tax

[speling bee]

I'd sell it for £6k if they're that easily confused.

Get a Director's loan on overdraft first.

[d000hg]

Secondly, the company just wants to give you £6k out of the kindness of their own hearts? What's to stop you taking the money and then leaving after a short time-period and keeping the money?

Nothing that unusual about a joining bonus... companies do this quite regularly and also will pay relocation costs, etc.

Which is why I'd sell them the company for a quid.

I'd sell it for £6k if they're that easily confused.

[speling bee]

They probably don't know, or aren't thinking about, the implications of what they are suggesting anyway. I find it's all very simple when you first have a bright idea

Which is why I'd sell them the company for a quid.

[Clare@InTouch]

They sound foolish.

They probably don't know, or aren't thinking about, the implications of what they are suggesting anyway. I find it's all very simple when you first have a bright idea

[speling bee]

I can't imagine the employer would be willing to do that, given that they would then also take on any debts they may not know about, and hold responsibility for anything the company had done previously. That's a massive risk to take on their part, and they'd be foolish to do so in my view - especially when they could just give him a golden handshake equal to the CT.

They sound foolish.

[Clare@InTouch]

How about you sell the company to the employer for £1 and let them sort it out.

Perhaps the accountants can advise why this won't work.

I can't imagine the employer would be willing to do that, given that they would then also take on any debts they may not know about, and hold responsibility for anything the company had done previously. That's a massive risk to take on their part, and they'd be foolish to do so in my view - especially when they could just give him a golden handshake equal to the CT.

[speling bee]

How about you sell the company to the employer for £1 and let them sort it out.

Perhaps the accountants can advise why this won't work.

[jamesbrown]

Why would anyone ever swap from contracting to perm anyway, especially with the same client? Are you going to get paid more? More flexible working? More variety of work? Less corporate rubbish like company politics and appraisals? I suspect quite the opposite. I suspect the client is the only one likely to benefit.

I completely agree with that part. However, you'd need to be an oracle to make an IR35 judgment on the basis of what the OP wrote (in jest). It's purely circumstantial.

[VectraMan]

I strongly expect they will give this to you as a joining bonus and so it will be subject to PAYE and NIC and then you can use it to repay the directors loan you took from the company (because it sounds like you did not have sufficient distributable reserves to make a dividend payment given you spent the CT money)

WSS. An employer can't just give an employee money without it being subject to PAYE, but if they pay you the £6K, even better if they pay you the £6K net, then you can then give the money back to YourCo, or if your losses are legit then lend the money to YourCo to pay the CT.

Don't entertain the idea of them paying the company or the CT bill directly, as that then creates a debt from YourCo to them, which you might think is okay until a couple of years time when somebody goes through the accounts and decides they want it back and the numptie middle manager who thought he could buy you off with some under the counter cash has long since left.

This also brings up the question of anti bribery legislation.

[javadude]

On what basis did you arrive at that conclusion?

Anyway, this thread is a complete joke (I hope)

If someone claims to be outside IR35 cause the relationship is nothing like employment and then swaps to being an employee with no change to the role/relationship then I'd suggest that they're going to be at risk of HMRC treating the contract as inside IR35 if they happen to take a look at it.

Maybe not, maybe they'll never take a look. Why would anyone ever swap from contracting to perm anyway, especially with the same client? Are you going to get paid more? More flexible working? More variety of work? Less corporate rubbish like company politics and appraisals? I suspect quite the opposite. I suspect the client is the only one likely to benefit.

[jamesbrown]

If you're currently contracting with them outside of IR35 then you've presumably factored in needing to switch to declaring yourself inside IR35 and paying any additional tax for the contract(s) to date? Unless the role was different it would show that your previous arrangement with them was similar to employment.

On what basis did you arrive at that conclusion?

Anyway, this thread is a complete joke (I hope)

[northernladuk]

As long as it isn't your accountant offering to pay it for you.....

If you need to keep working to cover last year's corporation tax bill, then something's VERY wrong with how you are running the business.

This was my very first thought! If you don't have enough in the bank to cover it you are on pretty dangerous ground.

[javadude]

If you're currently contracting with them outside of IR35 then you've presumably factored in needing to switch to declaring yourself inside IR35 and paying any additional tax for the contract(s) to date? Unless the role was different it would show that your previous arrangement with them was similar to employment.

[TheFaQQer]

I was wondering if this is legal?

Yes.

Obviously I will not be signing anything until I get it in writing but is there any legal way a company can clear my corporation tax legally?

They could pay you personally, and you make sure that income tax and NI are paid correctly on that sum. You then give the money to the company, and the company uses that money to pay the corporation tax.

Or your company could invoice them for the amount plus VAT which they then pay, and the company uses that money to pay the corporation tax owed. Obviously, if you are doing it this way, then your corporation tax liability increases because your profit has increased.

Or when you get your corporation tax bill, you just give them the payment details and they pay it directly and sort out the accounting around that.

To be honest, I'm struggling to find this believable - for a number of reasons. Firstly, what has your corporation tax burden got to do with needing to keep working? If you need to keep working to cover last year's corporation tax bill, then something's VERY wrong with how you are running the business. Secondly, the company just wants to give you £6k out of the kindness of their own hearts? What's to stop you taking the money and then leaving after a short time-period and keeping the money?

[SarahL2012]

I strongly expect they will give this to you as a joining bonus and so it will be subject to PAYE and NIC and then you can use it to repay the directors loan you took from the company (because it sounds like you did not have sufficient distributable reserves to make a dividend payment given you spent the CT money)

Alternatively your company can deliver services to them for £6k 'fee' - but that would be subject to corporation tax.

Either way you'll need to work out the net impact to make sure the gross payment they give you is sufficient post tax to give you what you need.

Worth speaking to your accountant for advice.