CJRS, limited company sole director, self-furlough & continue working with the same client?

joew71

I understood there was still the diverted funds issue per Companies Act 2006 even in that scenario though, and as others here have said, questions of use of company assets to do the work. So I think even that idea was probably fishy when it was said, but I agree it wasn't ruled out by rule [EDIT] 2.5 which appears to sink it utterly.

Jeremy535897

joew71 said:

I understood there was still the diverted funds issue per Companies Act 2006 even in that scenario though, and as others here have said, questions of use of company assets to do the work. So I think even that idea was probably fishy when it was said, but I agree it wasn't ruled out by rule 2.6 which appears to sink it utterly.

2.5, but what you say is technically correct, as per my earlier post.

"Position of trust

Directors must be extremely careful if they want to take advantage of an opportunity for private profit in an area of activity similar to that of the company – even if the company has rejected the particular proposition. For example, you should always take advice before buying or selling any assets from or to the company. Shareholders’ approval is needed before a director, or someone connected with the director, may acquire a substantial company asset, or vice versa.

If a director profits personally from his or her position, even if the company itself hasn’t suffered because of their action, a court can order him or her to pass on any profits made to the company."

Not that scary, in the context of sole director owners, but it does cast doubt on the effectiveness of such arrangements, as if there is a risk you could have to account to the company for your profit, you are potentially benefiting the company by your work, and in breach of furlough rules.

Grumpy_chap

I am still confused why the OP does not simply go furlough, then come off furlough to do the work, then go back on furlough.

LilElvis

joew71 said:

And BTW I am delighted to have some serious ammunition to go back to my associate for why he's almost certainly in serious trouble if he did actually do as he boasted he would. I don't actually know if he did.

Suggest he has a Google about what an HMRC investigation entails - it's not nice. The bonus for HMRC is that they will have a very defined time period to look at, making it so much easier for them. Self assessment hits their desk with a sole director who has claimed furlough but who also now has either a second directorship or self employed earnings - handing them a reason to investigate on a plate.

joew71

LilElvis said:

Suggest he has a Google about what an HMRC investigation entails - it's not nice. The bonus for HMRC is that they will have a very defined time period to look at, making it so much easier for them. Self assessment hits their desk with a sole director who has claimed furlough but who also now has either a second directorship or self employed earnings - handing them a reason to investigate on a plate.

If it were genuinely an unrelated second employment in a different field or industry for a different type of work,, for new and unrelated cllients, with a wholly independent set of business assets used to do the work, it seems from this thread that it would be legit.

I doubt that would prevent HMRC from looking into it though...

Potbellypig

OP - I'm in the same one man Ltd company position and believe me when I say that there are a lot of people claiming furlough and still working. A lot of it is easily hidden. How HMRC are going to look through this in the next 12 months or so is anyones guess. If I was guessing then I'd say a % will get audited and the rest will be given the benefit of the doubt, much like accounts are done now. Rishi is going to take the bottom out of this game come next April anyway (if he hsn't with IR35 already).

Grumpy_chap

Another thing for the OP to consider, as a sole Ltd Co, you never want to turn a Client away.  Better to retain the Client for the long term at the expense of short term.

unholyangel

Jeremy535897 said:

joew71 said:

And BTW I am delighted to have some serious ammunition to go back to my associate for why he's almost certainly in serious trouble if he did actually do as he boasted he would. I don't actually know if he did.

To be fair to Martin, his idea about becoming a self employed freelancer was valid when made, as it pre-dated the publication of the Treasury Direction.

It was never valid. He quite literally says in the video he just came up with it on the spot while filming one day and at no time says that he checked his "lightbulb idea" with anyone else. 

I cautioned against several pieces of advice he gave that were potentially dangerous and some that were just plain irresponsible. But hey, what do I know, I'm not a journalist that relies on people reading my stuff to make money and stay relevant. 

unholyangel

Potbellypig said:

OP - I'm in the same one man Ltd company position and believe me when I say that there are a lot of people claiming furlough and still working. A lot of it is easily hidden. How HMRC are going to look through this in the next 12 months or so is anyones guess. If I was guessing then I'd say a % will get audited and the rest will be given the benefit of the doubt, much like accounts are done now. Rishi is going to take the bottom out of this game come next April anyway (if he hsn't with IR35 already).

Where does 12 months come from? If you think that's how long they have to investigate, you're sorely mistaken. Try 240 months from the tax year end.

Jeremy535897

unholyangel said:

Potbellypig said:

OP - I'm in the same one man Ltd company position and believe me when I say that there are a lot of people claiming furlough and still working. A lot of it is easily hidden. How HMRC are going to look through this in the next 12 months or so is anyones guess. If I was guessing then I'd say a % will get audited and the rest will be given the benefit of the doubt, much like accounts are done now. Rishi is going to take the bottom out of this game come next April anyway (if he hsn't with IR35 already).

Where does 12 months come from? If you think that's how long they have to investigate, you're sorely mistaken. Try 240 months from the tax year end.

There is draft legislation available for comment on collecting tax on SEISS and CJRS:
https://www.gov.uk/government/consultations/draft-legislation-taxation-of-coronavirus-covid-19-support-payments