Short stint at contracting

[mbee123]

After a recent redundancy I have had a 3 month spell contracting, but I am now going back as a permanent employee (PAYE)

I had set up a limited company, and would like to send all of the money earned straight into my private pension (as I have been living off redundancy payment) to minimise the TAX paid, would I still need to complete a tax return? I assume the normal thing to do would be to dissolve the company? is this straight forward?

[NCOTBAC]

For an accountant it would, for you not so.

I'd have a chat to someone like Maslins who posts on here quite a bit and see if they will do you a fixed price package for doing it all properly.

Get it wrong or miss something and it's going to cost you considerably more in time and money than the cost of the accountant.

[Maslins]

Ltd Cos really aren't great for very short term contracting gigs. Appreciate hindsight's a wonderful thing and this doesn't help you now, but for anyone else reading who's considering dabbling in contracting, unless you're confident you'll be doing it for the medium to long term (ie at least 12 months), we'd recommend you operate via an umbrella.

In terms of where you are now, you likely can put the company's profit into a pension (check with annual cap, though with just 3 months income you're unlikely to breach that). You would still need to as a minimum submit a corporation tax return, which would need to include full statutory accounts. Depending upon what registrations you put in place, you may well have VAT/PAYE issues to tidy up as well, plus potentially self assessment too.

Theoretically you could DIY any/all of the above, but if you're not familiar with it, it's far from easy. An accountant could assist, but you may be frustrated at the fees involved for such a short time contracting. It's no less work doing a set of accounts/CT return for a 3 month period as a 12 month period.

[Old Greg]

Ltd Cos really aren't great for very short term contracting gigs. Appreciate hindsight's a wonderful thing and this doesn't help you now, but for anyone else reading who's considering dabbling in contracting, unless you're confident you'll be doing it for the medium to long term (ie at least 12 months), we'd recommend you operate via an umbrella.

In terms of where you are now, you likely can put the company's profit into a pension (check with annual cap, though with just 3 months income you're unlikely to breach that). You would still need to as a minimum submit a corporation tax return, which would need to include full statutory accounts. Depending upon what registrations you put in place, you may well have VAT/PAYE issues to tidy up as well, plus potentially self assessment too.

Theoretically you could DIY any/all of the above, but if you're not familiar with it, it's far from easy. An accountant could assist, but you may be frustrated at the fees involved for such a short time contracting. It's no less work doing a set of accounts/CT return for a 3 month period as a 12 month period.

Out of interest, what are the consequences for making sure the PAYE, CT and VAT are all correctly paid and documented (submissions etc.) and then just ignoring the rest of the paperwork? Just leaving the Ltd without closing it down or filing etc.

[Maslins]

Out of interest, what are the consequences for making sure the PAYE, CT and VAT are all correctly paid and documented (submissions etc.) and then just ignoring the rest of the paperwork? Just leaving the Ltd without closing it down or filing etc.

Dealing with all the tax stuff properly is 95+% of the work. Companies House would just want a DS01 (very simple form) after the tax stuff's all done and creditors paid. Therefore I don't see why anyone would do as you suggest.

However, if hypothetically they did, eventually Companies House would strike the company off for non compliance. Ie when the confirmation statement fell due, they'd send a few reminders, getting gradually more grumpy/threatening, then eventually strike the company off. Theoretically Companies House could take further action like barring the individual(s) behind the company from being directors again. In practice they'd likely only do that following repeated offences.