VAT query

looknohands

In the past I used to conduct work in the same line as the LTD but on a clients premises, on day-rate using their equipment, which I believe shouldn't be run through a LTD anyway?

These days all my work is on my own premises, using my own equipment working to agreed budgets.

But I believe if I ever wanted to take an in-house gig in the future I would have to run this as personal work through my self employed tax return rather than the LTD.

antrobus

looknohands wrote: »

In the past I used to conduct work in the same line as the LTD but on a clients premises, on day-rate using their equipment, which I believe shouldn't be run through a LTD anyway?

These days all my work is on my own premises, using my own equipment working to agreed budgets.

But I believe if I ever wanted to take an in-house gig in the future I would have to run this as personal work through my self employed tax return rather than the LTD.

There is no such rule.

Crumbs, there must be thousands upon thousands of IT contractors billing through their Ltd Co for work carried on their client's premises using their client's equipment. And what's more it's the reason they have a Ltd Co, otherwise they'd be on PAYE.

Pennywise

martindow wrote: »

I would be cautious working on this basis. If you are doing 'private' work which is in the same line of business as the VAT registered company, HMRC could well see it as VAT avoidance.

It's also going to be fun and games when you come to apportioning all your overheads/expenses between two different businesses, i.e. the sole trader and the limited company.

Your company will have to invoice you personally (plus VAT) for anything used in the sole trader business that belongs to or was paid for by the limited company.

looknohands

But when I work on-site I don't use any of my business overheads.
In the past the ST was doing on-site and work in our own office, now these would be entirely separate.

Let me be clear the limited company is a real business, I'm not an IT contractor I employ contractors, have an office with fixed assets, we create project work for clients, handling the entire contract.

When I'm working on-site for a client I'm helping on parts of the project, not working in my office, not using my equipment, not using my suppliers, the only thing I'm using that is inter-linked between the two is my own brain (that I'm sure the LTD company doesn't own?) So there's no overheads charged to my ST business.

Are you suggesting it's perfectly fine for me to run all work I do through my Limited company, even though to me the nature of the work seems fairly different as I'm working on parts of a project as ST, but managing the entire project as a LTD.

I was almost certain this would be illegal? As it would actually make me better off in terms of avoiding paying higher rate tax, I'd only be paying 20% corporation tax... avoiding 40% higher rate, and then just using it to pay expenses to my business.

Seems questionable?

paddyrg

Not only is it legal, it's normal. You own the company which employs you then rents you out. Unless you've something in your M&A preventing it (and no boilerplate text will) your company can deal in cars, rent you out as a consultant, trade beanie babies on eBay or all at once. Nokia made fishing equipment, now they've fingers in all sorts of pies. Businesses are expected to find new markets and expand

looknohands

My perception of individuals who work through 'companies', is I assume they're doing it to avoid tax. None of those 'companies' are really going to be growing business, retaining profits, employing staff or spending money on R&D (eg. the next Nokia!) I know someone who does this contracting for BP, and it's clearly just tax avoidance, taking all the money out of the company each year... no offense to anyone that does it but they're not real businesses and I thought it was questionable, (as you mention turns out it's legal!)

I'm building a brand, I want clients to link the company name to the work we do, not to think it's just there as a tax avoidance measure for my personal self. This applies to clients who I might work in-house for, I'd rather they weren't introduced to my business via me contracting with them.