IT Contractor going back permy... anyone done the same?

IT Contractor going back permy... anyone done the same?

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dannyDC2

Original Poster:

7,543 posts

168 months

Tuesday 18th October 2016
quotequote all
Afternoon all!

I've been contracting in IT just over a year. It's been good fun so far, but I've been offered an excellent opportunity of permanent emplyment which I'd be daft not to take.

So, the last time I hinted that I might go permy my accountant (SJD) were quite a bit scare monger-y in the costs of closing down a company/going back to permanent employment. I think that was more to do with me not being with them longer than a year (as I was contracted to), but I'm going to hold off contacting them for a couple of days until I sign the permy contract...

Now as per ever with this kinda of thing, I turn to you PH, to guide me!

Company is just over a year old, does it really NEED to be closed down? What are the costs involved with doing this, if so?

If anyone has done this themselves and can share their experience, and some do's and don'ts, that would be grand!

Cheers all,
Dan


UpTheIron

3,996 posts

268 months

Tuesday 18th October 2016
quotequote all
No it doesn't need to be closed down, but if it isn't you will need to continue to file accounts etc etc..

Does the company have a significant bank balance, as this might affect the best exit strategy.

Preparing final accounts should only cost a few hundred quid, less if it is well timed wrt your contract with SJD.

Nick Grant

5,410 posts

235 months

Tuesday 18th October 2016
quotequote all
I've been roughly:

1996-1998 Perm
1998-2000 Contract
2000-2002 Perm
2002-2004 Contract
2004-2011 Perm
2011-current Contract

So yes, you can do this no problem.

Providing you have kept enough cash in the company to cover your VAT and corporation tax you should be able to close it easy enough.

Nick Grant

5,410 posts

235 months

Tuesday 18th October 2016
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To add, The reason I would close it that paying SJD every month to do very little will get boring pretty quickly.

UpTheIron

3,996 posts

268 months

Tuesday 18th October 2016
quotequote all
OP, have you had multiple clients / contracts over the year or so? If not you might be in for a little bit of a shock wrt to any travel expenses you have claimed...

UpTheIron

3,996 posts

268 months

Tuesday 18th October 2016
quotequote all
Nick Grant said:
To add, The reason I would close it that paying SJD every month to do very little will get boring pretty quickly.
Think of the fee you pay as an annual contract split over 12 months (in fact with SJD I think it is exactly that).

dannyDC2

Original Poster:

7,543 posts

168 months

Tuesday 18th October 2016
quotequote all
Nick Grant said:
To add, The reason I would close it that paying SJD every month to do very little will get boring pretty quickly.
That got boring about 12 months ago, after the first month was over, lol!

bigandclever

13,787 posts

238 months

Tuesday 18th October 2016
quotequote all
UpTheIron said:
OP, have you had multiple clients / contracts over the year or so? If not you might be in for a little bit of a shock wrt to any travel expenses you have claimed...
Good call.

dannyDC2

Original Poster:

7,543 posts

168 months

Tuesday 18th October 2016
quotequote all
Nick Grant said:
I've been roughly:

1996-1998 Perm
1998-2000 Contract
2000-2002 Perm
2002-2004 Contract
2004-2011 Perm
2011-current Contract

So yes, you can do this no problem.

Providing you have kept enough cash in the company to cover your VAT and corporation tax you should be able to close it easy enough.
Yep, I haven't taken a dividends recently as I had a feeling this opportunity would surface! So should be plenty there to cover the bills.

dannyDC2

Original Poster:

7,543 posts

168 months

Tuesday 18th October 2016
quotequote all
UpTheIron said:
OP, have you had multiple clients / contracts over the year or so? If not you might be in for a little bit of a shock wrt to any travel expenses you have claimed...
2 contracts, both with fixed locations.

I was always a bit soft on the expenses stuff anyway. All I claim is my daily mileage at the moment. Heard of people claiming all sorts of daft stuff, but tried to keep it simple.

Think it will still bite me in the ass?

UpTheIron

3,996 posts

268 months

Tuesday 18th October 2016
quotequote all
dannyDC2 said:

Think it will still bite me in the ass?
nope... two different temporary workplaces should be OK. If it was only one then it would be difficult.

dannyDC2

Original Poster:

7,543 posts

168 months

Tuesday 18th October 2016
quotequote all
Sorry guys - what's WRT?

UpTheIron

3,996 posts

268 months

Tuesday 18th October 2016
quotequote all
"with respect to". On my phone so being stingy with characters!!!

Davie_GLA

6,521 posts

199 months

Tuesday 18th October 2016
quotequote all
I went permy. Then i got my first wage.

Cried, lots......

RizzoTheRat

25,165 posts

192 months

Tuesday 18th October 2016
quotequote all
I shut the company down when I went back to permanent, it wouldn't have been a lot of hassle to keep it open but I couldn't be bothered doing returns and the like indefinitely. I took a dividend to take me to the higher rate tax limit and then put the rest of the money in to a pension to avoid paying too much tax. Can't remember if the company bought the pension or if I took it as dividend and invested in pension myself though, your accountant will be able to advise on the best way though. Actually closing the company down cost next to nothing though.

6 years on and redundancy looms so I may be restarting it.

4x4Tyke

6,506 posts

132 months

Thursday 20th October 2016
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You have a few options and you do need to discuss these with the Accountant.

1) Close the company quickly. https://www.gov.uk/liquidate-your-company/members-...
2) Run down the company over time (essential until next tax year). If it has retained earnings that would better utilised by the company.
3) The company can be made dormant, ie. not-trading https://www.gov.uk/dormant-company/dormant-for-cor...


Edited by 4x4Tyke on Thursday 20th October 14:12

CAPP0

19,582 posts

203 months

Thursday 20th October 2016
quotequote all
I thought the company could only be made dormant if it had NEVER traded?

I went through the same a few years back, left the company open as it seemed the easy option at the time, then I missed the filing date and it cost me £750 eek

Strangely enough I'm heading back in the same direction (i.e. contract to perm) again at the moment.

dannyDC2

Original Poster:

7,543 posts

168 months

Monday 24th October 2016
quotequote all
Thanks for the replies chaps. Going to get in touch with the accountant today. Just sent the signed contract off for the permy job and have a start date..

BluePurpleRed

1,137 posts

226 months

Friday 28th October 2016
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The tax rules have changed so you can now get £5k of dividend tax free each year. £10k if you have a partner who you can make a shareholder. So thats a pretty good way of running the company down.

Negotiate a rate for doing only that and no invoicing or VAT etc from a new accountants and it should be pretty cheap.

dannyDC2

Original Poster:

7,543 posts

168 months

Friday 28th October 2016
quotequote all
Hey guys,

Had the following back from the accountant, sound reasonable? I'd probably go with the closing down route. Seems a bit strong money?

In regards to the company, you have now two options:



1. You can keep company dormant – that would give you the option to start trading again at any time. The fees would go down to £48 per month (including VAT) from new company year.
2. You can close the company and we can help you with that. If you go with this option, you will stop paying the SJD fees from the following months after closure date (I think it is now too late to avoid the November 2016 fees but definitely from December 2016 you would not have to pay for SJD fees). There is a closure cost of £360 for the companies with reserves below £25,000.


With closure, we prepare the closure accounts, closing VAT/ PAYE scheme and also would prepare 2016-17 tax return for you later on. I will be issuing you as well P45.