Reply to: Why are umbrella companies being required more often?

[Lance]

My accountant didn't think that was such a great idea. For starters, its quite hard to find a SIPP that would let me do that, and there would be costs involved too. I don't think he thought it was a terrible idea, just that I would be better off putting cash into the SIPP instead. Would also need to pay off the mortgage before putting the property into the SIPP too.

I think I might look into this again - as you say it would be a decent asset plus rent going into my pension.

your accountant is not an IFA though is he?

[eek]

Am I the only one that thinks there is a can of worms to be opening here. If only we could ask the OP and get enough facts to discuss...

But then we aren't bothered. OP has the answer to his question.

Just create a new thread and ask that "can of worms" question

[northernladuk]

Am I the only one that thinks there is a can of worms to be opening here. If only we could ask the OP and get enough facts to discuss...

But then we aren't bothered. OP has the answer to his question.

[willendure]

Which equally is a mistake - one of the best tricks you could do was put the property in your SIPP so the company is paying rent directly into your pension fund.

My accountant didn't think that was such a great idea. For starters, its quite hard to find a SIPP that would let me do that, and there would be costs involved too. I don't think he thought it was a terrible idea, just that I would be better off putting cash into the SIPP instead. Would also need to pay off the mortgage before putting the property into the SIPP too.

I think I might look into this again - as you say it would be a decent asset plus rent going into my pension.

[willendure]

Agreed. And the first question is who's name is it in...?

The office is owned by the Ltd. It has a small mortgage on it, £50k outstanding. I can repay it in full at any time without any penalties - but it also has something like 18 years left to run, and the interest rate is low. Its costing something like £60 per month in interest. The loan payments are about £400 per month, and leccy/gas/water/insurance/internet comes to around £160 per month, so the difference before or after tax on £560 per month is not huge.

[eek]

the businesses surely?
Otherwise the rest of the information is a lie.

Which equally is a mistake - one of the best tricks you could do was put the property in your SIPP so the company is paying rent directly into your pension fund.

[Lance]

Agreed. And the first question is who's name is it in...?

the businesses surely?
Otherwise the rest of the information is a lie.

[Lance]

The mortgage makes things rather more complex than would otherwise be the case.

oh. sorry. I misread. I though I saw that the business owned an asset rather than owed the bank.
yeah. You can't do an MVL when there are creditors.

Standard business practise in the UK would be to stop paying the mortgage and then the bank will wind the company for you. I'm not saying this is good practise but it is common.

[malvolio]

The mortgage makes things rather more complex than would otherwise be the case.

Agreed. And the first question is who's name is it in...?

[eek]

Assuming the office is a reasonably high-valued asset, you want to talk to an MVL specialist. They will be able to liquidate your company and free the assets. The transfer of the office toy yourself will simply be a paper purchase where you buy the office from the company and then take the money back at liquidation.
It needs doing right so get a specialist.

The mortgage makes things rather more complex than would otherwise be the case.

[Lance]

Fair enough regarding comments about it not being allowable expense.

I think the only way to keep the Ltd and office going will be to pay rent to the Ltd myself, out of taxed salary. Longer term, work out how to close the Ltd down and transfer ownership of the building to myself.

Assuming the office is a reasonably high-valued asset, you want to talk to an MVL specialist. They will be able to liquidate your company and free the assets. The transfer of the office toy yourself will simply be a paper purchase where you buy the office from the company and then take the money back at liquidation.
It needs doing right so get a specialist.

[malvolio]

Erm, if your contract is deemed inside IR35, there are effectively no 'expenses' such as mortgage, heating etc your company can claim.

Determining IR35 status means there are less limited contractor companies able to write neferious expenses off to tax while also meaning a bigger tax take for HMRC at source. Pay up first and we'll argue later in effect.

What am I missing here?

Not much. What people continually fail to realise is that the Company is an entity in its own right, that you are working for in order to generate its income so it can pay you a suitable wage and it can survive the lean times.

Instead they treat it as a tax mitigation device, often with unrealistic ideas over what is and isn't allowable.

And that's why we have IR35 and all the other limitations on how we make our living.

[Lance]

most contractors are in fact permies in disguise.

Scaring companies into being risk-averse and chucking everybody through brollies says jack all apart from they don't want to HMRCs next cash cow.

both of these are true

[willendure]

Fair enough regarding comments about it not being allowable expense.

I think the only way to keep the Ltd and office going will be to pay rent to the Ltd myself, out of taxed salary. Longer term, work out how to close the Ltd down and transfer ownership of the building to myself.

[TheDogsNads]

Makes sense. If my Ltd. doesn't pay the right taxes, agency or even client is on the hook.

My specific problem is... my Ltd. own its own office building on which it pays a mortgage, heating, electricity, insurance, repairs, computers, internet/phone etc. So I need money coming through the Ltd. to cover all these expenses. I would like to remain outside IR35 and operate as a genuine business, but if there will be no possibility of finding a contract that would allow this after April, things are a bit screwed for the Ltd.

Perhaps I could pay my Ltd. rent on the office...

Or else I am going to have to wind the Ltd. down and transfer the assets to myself, which will no doubt incur a big fat tax bill (and repaying of the mortgage).

Erm, if your contract is deemed inside IR35, there are effectively no 'expenses' such as mortgage, heating etc your company can claim.

Determining IR35 status means there are less limited contractor companies able to write neferious expenses off to tax while also meaning a bigger tax take for HMRC at source. Pay up first and we'll argue later in effect.

What am I missing here?