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  • FIRST POST
    • HappyUser
    • By HappyUser 13th Sep 19, 2:51 PM
    • 265Posts
    • 14Thanks
    HappyUser
    Shall I propose to my new employer to hire me via my LTD?
    • #1
    • 13th Sep 19, 2:51 PM
    Shall I propose to my new employer to hire me via my LTD? 13th Sep 19 at 2:51 PM
    Hello!

    Does it make sense to suggest my new employer to employ me via my LTD?

    How much will I save (%) and what are the pros and cons?

    Thanks!
Page 1
    • Caz3121
    • By Caz3121 13th Sep 19, 3:05 PM
    • 12,389 Posts
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    Caz3121
    • #2
    • 13th Sep 19, 3:05 PM
    • #2
    • 13th Sep 19, 3:05 PM
    is the position inside or outside of IR35?
    will you be working for other customers as well?
    you can use the check here to see whether you would be employed or self-employed
    https://www.gov.uk/employment-status/selfemployed-contractor
    • HappyUser
    • By HappyUser 13th Sep 19, 5:44 PM
    • 265 Posts
    • 14 Thanks
    HappyUser
    • #3
    • 13th Sep 19, 5:44 PM
    • #3
    • 13th Sep 19, 5:44 PM
    I am not sure on IR35.


    I won't be working for others for the moment.
    • liz bartun
    • By liz bartun 13th Sep 19, 5:51 PM
    • 92 Posts
    • 239 Thanks
    liz bartun
    • #4
    • 13th Sep 19, 5:51 PM
    • #4
    • 13th Sep 19, 5:51 PM
    Congratulations!

    Nothing to stop you proposing it. However, how much you could save (or not) and the pros and cons depend entirely on your new role, your personal situation and your employer.

    If you're seriously considering it you should make an appointment with your accountant first - they will be the best person to guide you in this matter.
    Ooh, when did I get that star?
    • Pennywise
    • By Pennywise 13th Sep 19, 6:10 PM
    • 12,069 Posts
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    Pennywise
    • #5
    • 13th Sep 19, 6:10 PM
    • #5
    • 13th Sep 19, 6:10 PM
    Your main savings would be negotiating a higher hourly rate to make up the employers NIC, pension, sick and holiday pay the "employer" won't be paying. Also, you are then able to claim some expenses against the income, which wouldn't be allowable as an employee. Downsides are extra costs of providing your own equipment/training, higher risks as you have no employment rights, higher accountancy fees, etc.
    • tacpot12
    • By tacpot12 13th Sep 19, 6:16 PM
    • 2,900 Posts
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    tacpot12
    • #6
    • 13th Sep 19, 6:16 PM
    • #6
    • 13th Sep 19, 6:16 PM
    If your new employer is very large, they will probably not want to employ you via your ltd. company as they don't want the overhead of an extra supplier on their books. They might contract with your ltd. company via an employment agency but you will have to pay the agency a cut of your income, but you can negotiate this below their normal rates as they did not find you the job.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always check official information sources before relying on my posts.
    • DoctorStrange
    • By DoctorStrange 13th Sep 19, 6:47 PM
    • 80 Posts
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    DoctorStrange
    • #7
    • 13th Sep 19, 6:47 PM
    • #7
    • 13th Sep 19, 6:47 PM
    This isn't something you really have a choice in - your employment status is a matter of fact.

    From what you've posted, I wouldn't even consider a limited company. After all, if you have an employer, you're an employee...
    • csgohan4
    • By csgohan4 15th Sep 19, 4:06 AM
    • 6,505 Posts
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    csgohan4
    • #8
    • 15th Sep 19, 4:06 AM
    • #8
    • 15th Sep 19, 4:06 AM
    OP why do you want to go limited company, what is your rationale? if you don't work you don't get paid, can you afford that?


    do you fully understand the tax on dividend's and the levels for tax efficiency.


    I suggest speaking to an accountant or looking at this in more detail.


    If your within IR35 there is no point in a limited company. You have to show control amongst other things as part of the test. As they were your employer and going through the limited company you may be classed as a disguised employee with no control
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
    • prowla
    • By prowla 15th Sep 19, 6:03 AM
    • 10,649 Posts
    • 9,518 Thanks
    prowla
    • #9
    • 15th Sep 19, 6:03 AM
    • #9
    • 15th Sep 19, 6:03 AM
    One of the key things is that when you work via a company, that is your employer; the 3rd party who has engaged you to do work, on a contract basis, is your company's client.

    You will not be an employee of the client, you will not receive paid leave, sickness cover, training, paid bank holidays, pension contributions, training, and other employee benefits; basically you get paid for the days worked. You will also not have any right of tenure and be able to be let go without reason (with appropriate notice as per your contract).

    Depending upon the salary, you may find that you need to have a contract daily rate 50% higher to give you the same income.

    However, if you have already started (or signed your contract) as an employee, then it is unlikely that the employer would want to switch you to working on a contract basis.

    If you did switch from employee to contract, then the IR35 "Friday to Monday" rule of disguised employment would kick in.


    If your turnover is above the VAT threshold, then you will need to register for VAT and add that 20% to your invoices to the client.


    You will have to do your own PAYE, VAT, invoicing, have a company bank account (you can't use a personal one), do the requisite monthly/quarterly/annual reports to HMRC and Companies House, and pay the bills to them on time. On a personal level, you will also have to do a self-assessment tax return.


    Engaging an accountant may take the load off the paperwork, but they aren't cheap.


    If the above seems a lot to take in, then it is...
    • HappyUser
    • By HappyUser 15th Sep 19, 10:55 AM
    • 265 Posts
    • 14 Thanks
    HappyUser
    The point is that I already have an LTD as I did previous contracts and I also have some research activities that some times require me to have an LTD so that I liaise with universities and other companies and I sign Non Disclosure Agreements etc.


    My accountant is an '...' because I think he only cares for me to pay him the £100 fee per month and he won't give me objective advice.


    If I can save e.g. £10k per year cash by working as LTD, it would be great.


    How do I check if IR35 kicks in? It is a huge company with billions of revenues in the UK, does that automatically make it within IR35?
    • p00hsticks
    • By p00hsticks 15th Sep 19, 11:09 AM
    • 7,151 Posts
    • 7,903 Thanks
    p00hsticks
    How do I check if IR35 kicks in? It is a huge company with billions of revenues in the UK, does that automatically make it within IR35?
    Originally posted by HappyUser
    No, the size of the comapny doesn;t make a difference, although it may mean that the comany has developed a position on how and whether it deals with IR35.

    The application of IR35 is complex, there have been many disputes over it, and there is much written on the subject available on the net but broadly speaking you need to ask yourself

    - Does the company engaging you require you to work in a given location and/or set hours or will you have discretion as to how, when and where you carry out the work ?

    - Do you have to do the work yourself or could you get someone else to do it ?

    As Doctor Strange has already said, the simple fact that you refer to an 'employer' suggests that you look on yourself as an 'employee' which suggests that IR35 would be applicable


    P.S. Look at getting yourslef a better accountant if you're not happy - make them work for their £100 a month
    • uknick
    • By uknick 15th Sep 19, 11:55 AM
    • 1,006 Posts
    • 456 Thanks
    uknick
    Use this HMRC checker for IR35 status.

    https://www.gov.uk/guidance/check-employment-status-for-tax

    It's not perfect, but I used it whilst contracting for the public sector to overturn the client's original decision the contract was inside IR35. Turns out they were just playing safe and hadn't bothered to actually check the rules.

    Two important question in the check are a) can somebody else from your company substitute for you and b) how much control do you have over the work.

    I can't comment on the role you are looking at but if you are filling a full time post and are at the behest of the management with regard to your working routine, there will be a good chance the role is inside IR35.
    • DoctorStrange
    • By DoctorStrange 15th Sep 19, 2:34 PM
    • 80 Posts
    • 30 Thanks
    DoctorStrange
    If I can save e.g. £10k per year cash by working as LTD, it would be great.
    Again, you don't get the choice of "working as an individual" or "working as a ltd". A limited company will sign a business to business contract for provision of services, whereas an individual will sign a contract for service. You can't mix and match the two.

    You seem be under the impression that you can be an employee of a company other than your own limited and somehow pay less tax as a result. You can't.

    Perhaps if you provide more information regarding what your limited company actually does, what services you'll be providing to the end client and on what basis, and whether that client is private or public sector we might be able to explain things in a little more detail.
    • csgohan4
    • By csgohan4 16th Sep 19, 1:27 AM
    • 6,505 Posts
    • 4,394 Thanks
    csgohan4
    OP I suggest you change accountant too, if they are unable to advise you on simple thigs like using a limited company, AND paying 100 a month, your being ripped off




    As above I suspect you will be within IR35, is it worth risking a HMRC investigation is the other question. Unless you can provide a water tight ir35 compliant contract and a suitable replacement amongst other things, you are in effect a disguised employee.


    Consult a professional to make sure your within the right side of the tax law
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
    • 00ec25
    • By 00ec25 16th Sep 19, 9:08 AM
    • 8,604 Posts
    • 8,492 Thanks
    00ec25
    and in case you are wondering, HMRC have recently sent letters to > 1,500 "contractors" who have worked "at" GSK for years informing them that they think each falls within IR35.

    It is not yet at the stage of a formal HMRC investigation, but we have had clients beating down our door looking for reassurance on the nature of their contract, including one who we have previously told that they would fail, since we give a free review of contracts as part of our service on sign up. On the other hand, the one who has been working there 5 days a week for 5+ years with no other source of income is, on paper, cast iron watertight.
    • DoctorStrange
    • By DoctorStrange 16th Sep 19, 7:04 PM
    • 80 Posts
    • 30 Thanks
    DoctorStrange
    And therein lies the absurdity of all this: even if your legal contract is watertight, it doesn't help.

    The "hypothetical contract" HMRC construct overrules the actual one.

    Madness
    • liz bartun
    • By liz bartun 16th Sep 19, 9:57 PM
    • 92 Posts
    • 239 Thanks
    liz bartun
    My accountant is an '...' because I think he only cares for me to pay him the £100 fee per month and he won't give me objective advice.
    Originally posted by HappyUser
    Did you discuss what would be covered by the £100/month fee? You would most likely have signed an agreement (engagement letter) that should have detailed whether the type of objective advice you have asked him for counts as included or extra. It's unlikely that he "won't" give you the advice.

    But really, if you have lost faith/trust in your accountant then you really ought to find another.
    Ooh, when did I get that star?
    • DoctorStrange
    • By DoctorStrange 17th Sep 19, 7:06 AM
    • 80 Posts
    • 30 Thanks
    DoctorStrange
    To be fair to the accountant here, whether engagements fall under the intermediaries legislation or not is a matter of employment law, not accountancy.

    If the OP wishes to know the differences between earning £X wages versus £X Gross Profit, the accountant should be able to tell him but he cannot review the OP's job offers or business opportunities and advise which ones to take.
    • tebthereb
    • By tebthereb 17th Sep 19, 5:00 PM
    • 146 Posts
    • 44 Thanks
    tebthereb
    To be fair to the accountant here, whether engagements fall under the intermediaries legislation or not is a matter of employment law, not accountancy.

    If the OP wishes to know the differences between earning £X wages versus £X Gross Profit, the accountant should be able to tell him but he cannot review the OP's job offers or business opportunities and advise which ones to take.
    Originally posted by DoctorStrange
    IR35 relates to tax legislation not employment law so really itís a chartered tax advisor that would be best equipped to advise on it.

    Status for tax purposes and employment law purposes are often the same but not necessarily.

    On the subject of fees it seems a lot to expect an accountant to cover that within a £100pm agreement if they didnít envisage (or more importantly, engage to provide) that advice. Itís a risky complex area.
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