Inside ir35...paid by your own Ltd... Is this possible

[Splreece]

Hi all..

I've had Frank conversations with client and agency and both have said I have to use umbrellas and can't use my own Ltd to pay via paye.

The current setup means the invoice dates, ranges pay periods all don't align and it's madness where no one can giv eme the same answer to basic questions...

I've offered for the client and agency to pay my Ltd direct and the Ltd then pays me via payroll (exactly the same as the umbrella).

Is there something I am. Missing as they are not happy I do it... So I'm being forced to stay with umbrellas and I'm constantly ringing up for missing payments...

[NotAllThere]

You are missing the fact that if they do as you ask, and you don't fulfill the requirements, they're the ones who are liable. It also causes accounting headaches for you, and is generally considered to not be worth it.

What basic questions do you have?

What do mean invoice dates and ranges pay periods don't align.

[malvolio]

If you are "constantly chasing payments" then that is a matter between you and the umbrella. You are paying them to manage your payroll, so make sure they are doing it. If they aren't then get a new umbrella.

As for IR35 caught though YourCo, it really isn't worth the bother.

[jamesbrown]

Sure, in theory, the Fee Payer can make a deemed payment to YourCo with all taxes having been deducted upfront (i.e., a "deemed payment"), but it rarely makes sense for either party (simpler for them to deal with an umbrella, more options for you w/r to pensions) and they've already told you they won't do it - perhaps take "no" for an answer, because they probably mean it? It's the same story with deemed payments, though, you need to handle that in your accounting software - not hard, but it needs special handling. Overall, an umbrella is simpler and it sounds like your only option anyway.

[ladymuck]

Taking JB's post a bit further:

The Fee Payer HAS to deduct income tax and NI from the payment being made to you. So your company will be receiving a net payment.

So if you invoiced 1,000 + VAT and as a ball park figure the deducted taxes were 25%, you would receive:

£750 (£1,000 less £250 in tax) + £200 (VAT).

You would then have to record the shortfall of £250 in your company's books as PAYE/NI liability already paid and would have to ensure that when you draw the funds out you document it correctly so as not to incur additional taxes when you submit your SATR.

Now compare that to putting the payment through an umbrella.
1 - the agency doesn't have to run a payroll scheme
2 - you have less accounting administration to properly account for the payment received not matching the invoice issued

[eek]

Taking JB's post a bit further:

The Fee Payer HAS to deduct income tax and NI from the payment being made to you. So your company will be receiving a net payment.

So if you invoiced 1,000 + VAT and as a ball park figure the deducted taxes were 25%, you would receive:

£750 (£1,000 less £250 in tax) + £200 (VAT).

You would then have to record the shortfall of £250 in your company's books as PAYE/NI liability already paid and would have to ensure that when you draw the funds out you document it correctly so as not to incur additional taxes when you submit your SATR.

Now compare that to putting the payment through an umbrella.
1 - the agency doesn't have to run a payroll scheme
2 - you have less accounting administration to properly account for the payment received not matching the invoice issued

3. The umbrella will be paid gross which alllows them to pay into your pension fund before national insurance is taken

[northernladuk]

Find an umbrella that meets your requirements around pension payments and go with it. It's just not worth the hassle doing it through the LTD. It's the preferred process for many reasons, some to suit the agency, some to suit you. If you have an accountant they will drop your charges for their services if you aren't using the LTD as well so save a bit in that area.