Company changing from LTD to LLP, Mortgage implications?

craig.1987

Hopefully i am in the right pace and may be able to get some form of clarification on this!

Background.

I started work for a LTD company who specialise in home improvements on an employed basis through PAYE back in October 2019, since then the company has encountered some financial difficulty resulting in £120,000 of debt and quite a few of us not been paid since November to date.

Around 3 weeks ago the company has taken on investors who are working towards making the company turn a profit and become successful, they have re-structured the company but not invested any money as they believe that we can work our way out of the debt through better management which is great if possible.

I had a meeting with the new investors last week who told me that in order to make the best of the company they will need to change the company from LTD to a LLP (limited liability partnership) of which myself amongst others would be a member, i will still take a salary paid on a monthly basis, but, i will need to become self employed to do so.

Questions.

Does anyone know if being self employed as part of an LLP differs in anyway from being normally self employed in regards to acquiring a mortgage? I know from past experience that usually as somebody who self employed you would need around two years tax returns.

Any other information in regards to how been self employed under an LLP could effect me would also be very much appreciated.

If you could explain this in as simple terms as possible that would also be great.

Thanks very much.

Craig.

kingstreet

Were you a shareholder in the limited company or simply a salaried employee?

Will you be an equity partner in the LLP? If not, I don't understand why you would become self-employed and not simply continue as an employee of the partnership as you were an employee of the company...

sal_III

Indeed, if you weren't a shareholder, but just an employee of the company before, why would they make you a partner in the LLP?

The whole setup smells like a restructure before they could fire you without employment rights for cost savings. Even if it's all "kosher" you will not have the same job and income security as an employee.

I would start looking for a new job as a matter of urgency, not a mortgage.

craig.1987

@kingstreet @sal_111

No i am not a shareholder in the business, i am led to believe that once the company has moved into an LLP that i will be salaried on a self employed basis but retain most of my employee rights.

Apparently it is the same structure as John Lewis where everyone is classed as a "member" of the partnership, i will not have to put any money into the company as my services to the company are regarded as my investment.

It is all very confusing to me, the switch over will be around march 2020.

I would think it be unlikely that i would lose my job as myself and two others are a core part of the company on the daily running and fitting of work as we are at the minute fairly small, this said, stranger things have happened so we are of course very wary.

kingstreet

It might be worth speaking to an Accountant about the pros and cons of this.

LRmortgage

Are they going to transfer your employment and the TUPE regulations.

If not, you could potentially loose any accrued time in this employment as well as many rights as an employee.

It sounds a bit fishy to me to be honest.

I agree with the above, an accountant would be helpful, also an HR specialist / employment lawyer would be sensible in my opinion.

[Deleted User]

If you aren't receiving "Profit Share" (effectively dividends) then you'll probably be treated as an employee for mortgage purposes - depending on how many other members there are.

Taking the John Lewis example - Underwriters aren't going to request business bank statements from John Lewis, even for a store manager. It'd be impossible as they have no real power or control over the LLP as a whole.

LLP with your brother, then of course we'd want the statement.

So the number of partners (effectively, your percentage) is key.

If it's small (/many partners), I can't imagine it'd cause you too many problems apart from having to explain the recent change from Ltd (IF the lender pick up on it).

Keep_pedalling

craig.1987 wrote: »

@kingstreet @sal_111

No i am not a shareholder in the business, i am led to believe that once the company has moved into an LLP that i will be salaried on a self employed basis but retain most of my employee rights.

Apparently it is the same structure as John Lewis where everyone is classed as a "member" of the partnership, i will not have to put any money into the company as my services to the company are regarded as my investment.

It is all very confusing to me, the switch over will be around march 2020.

I would think it be unlikely that i would lose my job as myself and two others are a core part of the company on the daily running and fitting of work as we are at the minute fairly small, this said, stranger things have happened so we are of course very wary.

John Lewis partners are not self employed,

comeandgo

John Lewis is not an LLP, it is a ltd company, all staff are employees.

AnotherJoe

I wouldn't be getting a mortage in these circumstances.

craig.1987

Yes I would agree, I will be getting my contract details soon so I will go as soon as I have this.

Thanks.