NOW THAT YOU ARE CAUGHT UNDER IR35 LEGISLATION, WHAT NEXT?
It is not news again that the IR35 legislation is changing from April 2020.
In this blog post, I have explained 7 things that contractors that are under the IR35
The Umbrella companies to be used under the IR35 legislation:
You would need to consider is the umbrella company that would support you in processing your wages from April 2020.
- There are different umbrella companies out there that could support you. You don’t have to necessarily use the one provided by your agency.
- You need to make sure that its an umbrella company that is reputable. This is because they would pay HMRC all your taxes and national insurance that is deducted from your wages.
- You need to be careful with umbrella companies that promise to save you tax by employing various tax avoidance schemes.
If you decide to still use such an umbrella company, ensure you have details of the transactions.
Also, you need to know more about the consequences of your actions.
- Check your payslip regularly. This is to ensure that the right amount of tax and national insurance is deducted and also the right tax code is applied.
- Just in case you have more than one umbrella company processing your limited company, ensure that you claim just one full tax code and emergency codes such as BR and OT are applied to your other employments.
What happens to your limited company under IR35?
You can still trade with your company under the IR35 however before the payment is paid to your company, tax and national insurance would have been deducted.
If you don’t plan to use your limited company under the IR35 legislation and you do not have any commercial reason to hold onto the limited company, you will need to strike off your limited company.
I always advise to striking of the limited company after all the compliance issues have been dealt with.
If you decide to leave the company active, you will need to submit a dormant account and a confirmation statement yearly until such time that it is finally used or struck off.
Self-assessment returns for 2019/20:
Final self-assessment returns would need to be submitted to HMRC; this only applies if you don’t fall under the self-assessment regime for other reasons.
If your business is registered for Value added tax in the UK. You would have to submit the final Vat returns and then deregister the VAT scheme, if not done you will keep receiving a letter from the revenue for VAT returns submission and assessment notice for payment.
Paying off outstanding taxes and other:
You must pay outstanding taxes and other liabilities before you start the striking off process.
If you don’t do this, HMRC could block your company from being closed until such payments have been paid.
Process of striking off the limited company:
The process of striking off the limited can be initiated as soon as the final accounts have been submitted. Also, all outstanding tax payments should be made. The HMRC or any creditor can stop the striking off process if tax is unpaid. Also, the directors of the limited company could be personally liable for this outstanding tax bill even after the company has been dissolved.
Company’s bank account and credit card
As soon as the strike off process has been initiated, the director needs to ensure that the taxes have been paid and cash drawn out.
If money is left in the bank accounts and the company is struck off, they would have to apply for this money from the Crown.
If you would like more support, kindly contact us at www.ronzlaccoutants.co.uk or 01604965826 for a free consultation.