New Company Director - 18 Years old - do i qualify for Furlough ?

OldandBold

So here`s my question, My son set up his own business, aged 18, in Feb this year. He is the sole director of his limited company.
He has been fortunate to have been reasonably busy all over lock-down, he has paid himself from the business account, as and when he needed, with no PAYE being set up with the government since incorporation ( Kids aye )  ..... Now in November, work has come to a halt, so he`s not paying himself of course, does he qualify for Furlough ? 

Thank you 

poppy12345

OldandBold said:

with no PAYE being set up with the government since incorporation

No, because without this there will be no RTI submission made before 30th October 2020. https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme

Jeremy535897

He will need to pay himself to eliminate the overdrawn director's loan account. He should have an accountant.

tripled

A Ltd Co is a legal entity in its own right, so company funds do not belong to your son and dipping into them could get him into hot water. I'd suggest he needs advice from an accountant to straighten up his affairs, but essentially they'll need to be regularised as dividends, salary, or as a directors loan to be repaid. There are differing tax implications for each option. Dividends don't count for furlough and as Poppy12345 said, it would be too late now for salary.

Please tell me that he at least has a company bank account for his Ltd Co (Starling do free ones if not) and some form of book keeping system (Bokio is free and easy to use).

Grumpy_chap

Unfortunately, your son will suffer from his own actions.  Had he paid proper PAYE rather than helping himself from the till, he would be eligible for furlough.  At least the lesson is learned while he is young and he can normalise his affairs for the future.  Drawing funds to the Diretcor's Loan account just mean that he will now need to process PAYE payroll for the funds already drawn from the business but not take the money again.  He needs an Accountant and a business bank account..

CKhalvashi

No, due to the reasons Poppy mentions.

He'll need to keep records of what he's paid himself for the purpose of taxation of dividends, but that's just future planning and doesn't affect anything now, as he's effectively loaned himself money from the company which will require dealing with at year end.

unholyangel

It's a moot point if he isn't self employed or paid under PAYE, but I'd also ask if the work stopping was due to covid. As it would seem strange for it to be busy through the first 7 or 8 months and only now come to a halt. 

dunstonh

he has paid himself from the business account, as and when he needed, with no PAYE being set up with the government since incorporation ( Kids aye )

Not only has that prevented him from using CJRS (furlough), it also means he is not qualifying for the state pension.  Directors of own company should be taking a salary to the primary threshold (in the majority of cases) with dividends above that.