Starting new ltd co.

[BolshieBastard]

Not sure if this is the right forum for this so apologies!

Been discussing with accountant IR35 strategy and ways to re claim travel expenses lost due to the 24 month rule.

His practice's advice is to close the existing ltd co and form a new one. When the new co is formed, it should also be registered for the VAT FRS which gives an extra 1% 'discount' for the first 12 months.

He also takes the view that seeing as its a new co, it can be argued Im a new employee on its first assignment so would claim travel expenses at the same client as the previous co.

He says there's a chance HMRC may link the two together but seeing as their resources are stretched thinks it unlikely. In any event, if they do what have you lost because you couldnt claim the travel under the old company anyway.

So, I like the sound of this and think the risk is wort it.

I can either get him to register the new co or do it myself through one of the many website.

What are all the things we need for a new ltd co? There's several options on the quick register sites and dont want to chose the wrong one!

[kaiser78]

I went through a company called 'Simple Formations' and was set up within 5 hours I recall. All done online, total cost was £50 which included 2 x printed sets of each document (as opposed to pdf versions which would need to be printed). Easy.

[gingerjedi]

I was on the same client site for 3 years, with an umbrella for the first 2 and Ltd for the last year, I stopped claiming expenses as soon as I knew I'd be their more than 24 months as I knew that was the correct thing to do.

It’s up to you but if there is an investigation down the line what do you think they'll do when they find you’ve evaded tax? I’d rather sleep at night than worry about the potential consequence of bending the rules for personal gain.

[Crossroads]

So your accountant is advising you to commit tax fraud?

Time to get a new accountant. If he's doing it deliberately then sooner or later Hector will come knocking and no doubt all his clients will get a close look. If it's due to ignorance you don't want him as your accountant.

[VectraMan]

If you're counting on HMRC not looking too hard, why not just claim much larger expenses than you have in the first place? Or better still, charge the client for VAT, but don't register for VAT (just make up a VAT number, they'll never check).

[BrilloPad]

what have you lost because you couldnt claim the travel under the old company anyway.

Are there no penalties if caught?

[PhilAtBFCA]

New Limited Company ?

Hi BolshieBastard

I think you should consider very carefully what action you take regarding the expenses. If HMRC see that you took advice like this , and then took action, as an obvious ploy to attempt to circumvent the 24mth rules they may see fit, in my opinion, to apply the strongest penalties under the new penalty regime. I would look at the penalties you may suffer, and cosnider if its worth the risk, HMRC have a big emphasis on taxpayers being responsible and compliant.

Its not that difficult for HMRC to link the two companies through PAYE systems. Although I agree they are stretched and you may "get away with it".

If you are over the 24 mths then maybe either accept the fact and try to get an increase to make up for the loss of tax deduction on travel expenses, go for a new project, same project but different site. ( I realise none of this is easy in current climate).

You could also register your current company for FRS on VAT anyway without forming a new company.

I would also make sure you are claiming everything else that you can, and maybe using tax deductible pension contributions if this fits with your requirements.

For a new Limited Company ( £25.57 inc vat ) done in arround 4 hours if you do it in the morning you will need:-

Company Name, Registered Office Address ( Home ?) Directors Name & Address (You ?), Shareholders Name & Address (You ) and Number of Shares.( 100 )

You can do this at http://www.blevinsfranksaccountants.com

Good Luck

[BrilloPad]

Hi BolshieBastard

I think you should consider very carefully what action you take regarding the expenses. If HMRC see that you took advice like this , and then took action, as an obvious ploy to attempt to circumvent the 24mth rules they may see fit, in my opinion, to apply the strongest penalties under the new penalty regime. I would look at the penalties you may suffer, and cosnider if its worth the risk, HMRC have a big emphasis on taxpayers being responsible and compliant.

Its not that difficult for HMRC to link the two companies through PAYE systems. Although I agree they are stretched and you may "get away with it".

If you are over the 24 mths then maybe either accept the fact and try to get an increase to make up for the loss of tax deduction on travel expenses, go for a new project, same project but different site. ( I realise none of this is easy in current climate).
You could also register your current company for FRS on VAT anyway without forming a new company.

I would also make sure you are claiming everything else that you can, and maybe using tax deductible pension contributions if this fits with your requirements.

For a new Limited Company ( £25.57 inc vat ) done in arround 4 hours if you do it in the morning you will need:-

Company Name, Registered Office Address ( Home ?) Directors Name & Address (You ?), Shareholders Name & Address (You ) and Number of Shares.( 100 )

You can do this at http://www.blevinsfranksaccountants.com

Good Luck

Asking for an increase to cover expenses seems to indicate permie mentality. I assume we all extract the maximum we can out of each gig?

As for moving to a different project : I thought 2 years covered same geographical location? So even working for, say, 2 different banks in the city, would be caught? Working for same end client at same site seems to be a guarantee of being caught?

[Bob Jones]

The law in this case is S339 (5) ITEPA 2003 and if attendance at the workplace is in the course of a period of continuous work lasting more than 24 months then the claim fails. At this point the possible fact that more than one employment may be involved is conspicuous by its absence - the law refers to "attendance", however, it is necessary to look at the legal definition of a "period of continuous work". The act goes on to say, at subsection 6 - that for the purposes of subsection (5), a period is a period of continuous work at a place if over the period the duties of the employment are performed to a significant extent at the place. Here the Act refers to the "duties of the employment" - now does that mean that each employment is looked at separately? It was not the intention of those who wrote the legislation that a person could simply keep on setting up companies every 23 months or so in order to circumvent the 24 month rule. As far as I am aware this has not been tested - it is a question that has cropped on various forums in the past and it would be an interesting point to argue before the Commissioners/ new appeals tribunal and if anyone wants to do that by all means go ahead. Personally I would not advocate creating a company to try to avoid the effect of the 24 month rule but the same thing can occur naturally - eg an itinerant worker is made redundant - has a spell unemployed and then secures further itinerant employment and happens to be at the same workplace or one "close" to the last one attended. HMRC now offer an independent review by their Appeals Unit and that is often sufficient to settle the case - at least it will be looked by an "expert" but if anyone does fancy going ahead I suggest that you opt for the higher appeal body - the one that is going to take the place of the Special Commissioners that way the answer is the next best thing to case law ..
I don't think it is wise to suggest that the law should be broken on the basis that HMRC are too busy ....

Bob
http://www.contractoralliance.co.uk/...ctor_expenses/

[BolshieBastard]

So your accountant is advising you to commit tax fraud?

Time to get a new accountant. If he's doing it deliberately then sooner or later Hector will come knocking and no doubt all his clients will get a close look. If it's due to ignorance you don't want him as your accountant.

Nope, not advising committing 'tax fraud' as you claim.

They say they can make a case on a new company , new employee, new assignment ergo fresh start.

I may not make the expenses claim if I go this new company route so even then there'd be no fraud committed.

The extra 1% discount with the VAT FRS coupled in with the benefits of the FRS for contractors would virtually equate to the loss of travel expenses anyway.