Legit startup and software developer contract.

[mike10]

Hi

I have a legit startup with own product, etc. However now it is time to get more money for a marketing.

I wanted to take some contract that would be paid to the ltd company (owned by USA corporation) and then I would get my PAYE salary.

Basically I want to use most of the extra income for a marketing purposes, I woudn't pay those money as PAYE or dividends.

I was doing some reading, and looks like HMRC is after umbrella companies and the legit company, with website, product (SaaS), VAT should be out of IR35 ? After all I can rent out my asset and make money on it and spend for expansion.

Seems to me that IR35 shouldn't be a problem because:

1. This is a legit company
2. There is a product that costed a lot of money to develop
3. Income shouldn't be counted as personal as was spend on company expansion
4. I would be paid via PAYE / maybe some dividends (but hard to tell as UK company is earning money from SaaS product (mebership))



Was anyone in the same scenario ? Can my business make few extra grand a month by simply "renting" me out ? That would be a perfect solution as currently I am taking with some USA investors, and definitely 5-6k spend on marketing would boost the corporation value.


I don't think that US corporation should have impact, but as this is a real business, and US inc. is a the main business, they are transferring money back and forth (UK company will be billing US corporation for marketing purposes + will be transferring income from SaaS to USA), I guess this would be make this case even stronger as not sure how HMRC could say that me (employee of LTD) was disguised as an employee if this would be a simple contract between two business to make few £ to expand the business...

BTW How much time would I have before HMRC would make the investigation ? Is it after I do my corporation tax return ? I am asking as I plan to have investors on board within 4-7 months, so if IR35 is only a problem after 12-16 months, then I would have proper backup from investor legal team and money (this is +$1m investment and part of the investment is support from legal/tax/HR team from the investor) to fight HMRC (if necessary).


So I would be fine having IR35 investigation, as long it as AFTER I get the investment and support. (after all only reason for this is to expand business, drive more traffic and I will end up with probably 2k a month , as I am counting on future business profits).


Currently I have full time job, but it is only 43k and still have to pay PAYE despite the fact that most of that is going into my business, looks like contract would be perfect (I would be getting ~ £400 a day and spend most of it towards marketing costs and just paid myself ~ £70-£100 a day).

[Lance]

short answer.... Yes you can. It's not an uncommon business model for a startup.

You should really understand IR35 (read the guides to the right).
The US ownership of the company is a complexity though. If you don't own any shares then you can't take dividends, so on that basis IR35 is immaterial as all the money you take is salary.


However your post is contradictory. You say you wouldn't take money as PAYE or dividends.
They you say you would be piad by PAYE and maybe dividends.

The you say you're looking for investors but you'd already said you're US owned.

*confused*

[simes]

Glad someone else decided to dip their toe in these confused waters first.

I was tempted to ask questions, but decided the questions would outweigh any possible answers I might have had.

[northernladuk]

Glad someone else decided to dip their toe in these confused waters first.

I was tempted to ask questions, but decided the questions would outweigh any possible answers I might have had.

But thanks for posting bro. Useful.