Ltd Company and Furlough Scheme Ltd Company and Furlough Scheme
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  1. #1

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    Default Ltd Company and Furlough Scheme

    Firstly I apologise if this has been covered elsewhere but was struggling to find.

    Situation: I am a director and employee of a ltd company (outside IR35) and have recently lost my only contract due to covid. I am considering applying for the furlough scheme on my salary but had some concerns:
    1. I understand searching for a new contract is not allowed. How is this defined? Is the onus on me to prove i did not look for a new contract (for me usually through recruitment agents)? Surely the sooner i would have a new contract the quicker i could stop claiming.
    2. IR35 status. I am concerned that claiming furlough would compromise my IR35 status (outside) or be a red flag for investigation?
    3. I understand that claims for furlough could be retrospective. So if a new contract had not surfaced in say 2 months i could claim retrospectively? However this leads me back to point 1 about not searching for new contract.

    Needless to say i'm a bit puzzled on what to do. Anyone in the same position or have any advise.. it would be greatly appreciated?

    Again sorry if this has already been discussed

  2. #2

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    Quote Originally Posted by redrabbit View Post
    Situation: I am a director and employee of a ltd company (outside IR35)
    No such thing. I'll rant about this in point 2.
    1. I understand searching for a new contract is not allowed. How is this defined? Is the onus on me to prove i did not look for a new contract (for me usually through recruitment agents)? Surely the sooner i would have a new contract the quicker i could stop claiming.
    Ignore all that and just fill your boots. When you look for work you don't know if it's going to be via the LTD or via brolly/PAYE so you could argue you are looking personally first of all, once you've found a gig you will then decide to progress either through the LTD or via brolly. You haven't done any work as a LTD until you've decided to put the gig through it.
    Or you could just ignore convoluted situations like that and just get on with it. No one is going to take any action against someone actively looking for work really.
    2. IR35 status. I am concerned that claiming furlough would compromise my IR35 status (outside) or be a red flag for investigation?
    Now.. This type of thing really gets my goat. We've just been through a period of the most intense scrutiny of IR35 contracting has ever been through so to get such a fundamental and basic point of IR35 this wrong is inexcusable. IR35 101... It applies on a contract by contract basis. It's got absolutely sweet FA to do with your company as an entity. It cannot be inside or outside. Each gig you do is. You could do an inside and an outside one in parallel if you want. It has zero bearing on the company. This really is not the time to be coming out with stuff like this.
    3. I understand that claims for furlough could be retrospective. So if a new contract had not surfaced in say 2 months i could claim retrospectively? However this leads me back to point 1 about not searching for new contract.
    Point 1 is irrelevant so get applying for it ASAP and continue to look for new work in the meantime.

    Needless to say i'm a bit puzzled on what to do. Anyone in the same position or have any advise.. it would be greatly appreciated?
    ADVICE!!

    Hope that helps and welcome to the forums.
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  3. #3

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    Thanks for this! Yes you're of course right about the IR35 status being per contract.. my bad. Just want to avoid any unnecessary reason for investigations

  4. #4

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    Quote Originally Posted by redrabbit View Post
    Thanks for this! Yes you're of course right about the IR35 status being per contract.. my bad. Just want to avoid any unnecessary reason for investigations
    Knowing the basics of IR35 would be a decent start.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  5. #5

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    Quote Originally Posted by northernladuk View Post
    ADVICE!!
    Wow!

    Spelling tips from Northern! That is really quite erm, Something...

  6. #6

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    Quote Originally Posted by redrabbit View Post
    Firstly I apologise if this has been covered elsewhere but was struggling to find.

    Situation: I am a director and employee of a ltd company (outside IR35) and have recently lost my only contract due to covid. I am considering applying for the furlough scheme on my salary but had some concerns:
    1. I understand searching for a new contract is not allowed. How is this defined? Is the onus on me to prove i did not look for a new contract (for me usually through recruitment agents)? Surely the sooner i would have a new contract the quicker i could stop claiming.
    2. IR35 status. I am concerned that claiming furlough would compromise my IR35 status (outside) or be a red flag for investigation?
    3. I understand that claims for furlough could be retrospective. So if a new contract had not surfaced in say 2 months i could claim retrospectively? However this leads me back to point 1 about not searching for new contract.

    Needless to say i'm a bit puzzled on what to do. Anyone in the same position or have any advise.. it would be greatly appreciated?

    Again sorry if this has already been discussed
    1) Furloughed workers are allowed to undertake other employment, looking for a role is not working.
    2) You will be fine
    3) Not sure it can be, your company needs to agree furlough with the worker (I note it is you having a conversation with yourself). And you will need to show a document trail if investigated. The minimum furlough period is 3 weeks. The only way you could retro it is committing perjury.

    HTH

  7. #7

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    Quote Originally Posted by northernladuk View Post
    It's got absolutely sweet FA to do with your company as an entity. It cannot be inside or outside. Each gig you do is. You could do an inside and an outside one in parallel if you want. It has zero bearing on the company.
    This is simply not true. Inside "gig" has profound impact on your company that is your company won't see a penny from the engagement (except for 5% relief if in private sector).

    If you go "inside" then you become deemed employee of the (not really a ) client and you are no longer a business (from the perspective of that particular contract).

    You can of course loan the money to your company so you can keep the lights up.

    But I can't see how someone even considering "inside" be perceived as business.

  8. #8

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    Quote Originally Posted by elsergiovolador View Post
    This is simply not true. Inside "gig" has profound impact on your company that is your company won't see a penny from the engagement (except for 5% relief if in private sector).

    If you go "inside" then you become deemed employee of the (not really a ) client and you are no longer a business (from the perspective of that particular contract).

    You can of course loan the money to your company so you can keep the lights up.

    But I can't see how someone even considering "inside" be perceived as business.
    You've completely missed the point. They guy isn't in contract yet he's stating his company is outside IR35. There is no such thing.

    And it is possible still to be inside and run it through the LTD.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  9. #9

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    Quote Originally Posted by elsergiovolador View Post
    This is simply not true. Inside "gig" has profound impact on your company that is your company won't see a penny from the engagement (except for 5% relief if in private sector).

    If you go "inside" then you become deemed employee of the (not really a ) client and you are no longer a business (from the perspective of that particular contract).

    You can of course loan the money to your company so you can keep the lights up.

    But I can't see how someone even considering "inside" be perceived as business.
    Taking a £1000 a day inside contract compared to a £300 per day outside contract can be seen as in the best interests of the shareholders of your company. It therefore makes good business sense to stop taking on new business while that person works on the inside contract. It could be a short-burst, 8 week gig but that's 40 grand and 42 more workable weeks in the company financial year. Not everything is cut and dried with inside versus outside.
    The greatest trick the devil ever pulled was convincing the world that he didn't exist

  10. #10

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    Quote Originally Posted by northernladuk View Post
    You've completely missed the point. They guy isn't in contract yet he's stating his company is outside IR35. There is no such thing.

    And it is possible still to be inside and run it through the LTD.
    I think you missed my point.

    Yes, you can run it through the LTD but it is not responsible as your employee runs company into debt. If I was a shareholder of such company I would report it.

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