In-between sole trader self-employed and Limited Company - have we fallen through the gap?

lmwray

Hello all - first time post here... could anyone help?
Will my husband qualify for help under the self-employed support scheme?
My husband has submitted over 3 years of tax returns up until 2018/2019 tax year, but approximately one week before the offer of this support, he registered his business as a Limited Company on Companies House.

• We are both listed as directors on Companies House
• We have written to all his clients to notify them that we will be operating as a Limited Company
• We haven't traded under the Limited Company yet
• Our PAYE scheme hasn't been set up yet
• We haven't written to HMRC to wind up my husband's previous sole-trader company

Is it likely that the government will recognise him as a sole-trader or will they look at the Companies House listing and rule him out of any support? 
Thank you so much in advance of any replies. 

unholyangel

Well part of the criteria is that they sumitted a return for 18/19, they traded in 19/20 and will continue to trade in 20/21. 

If your husband has incorporated as a limited company then it sounds like he falls at the last hurdle at least, as it will be the limited company trading rather than him as a sole trader. 

So while he may not qualify for SEISS. He may qualify for some of the other schemes like BILS. 

whizzywoo

You say that the limited company has not commenced trading yet.
You could keep the company dormant for the rest of the 20/21 tax year and carry on trading as self employed.  Write another letter to your clients explaining that due to the current Corvid 19 crisis you are continuing to trade as self employed.

This way you will still meet the criteria for the self employed help and you will just delay the limited company trading by a year.

Jeremy535897

I think that the actions taken are extremely unhelpful, because the conditions of eligibility include a requirement to be trading (or unable to trade due to COVID 19) at the date of a claim, and also require that he intends to continue to trade as self employed in 2020/21. All may not be lost, if he can show that the self employed trade was adversely affected by COVID 19, and he writes to all the clients to say that he has changed his mind and will continue to operate as self employed (not as a "sole trader company" , the description you give to the past business as in your post, which is an oxymoron). There is a risk that HMRC may not accept that the conditions for the grant will be met even if he does this. Although there is nothing to stop the change of mind (assuming nothing has actually been done to transfer the business yet), if it is done with the sole purpose of gaining a grant, there could be problems. It would also be prudent to leave the company dormant until say next tax year. Read the guidance carefully, and then decide for yourselves whether he would be eligible if you take this course of action:
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

lmwray

Thank you all for taking the time to reply - it's very helpful and much appreciated.