Spouse working for Limited Co.
Spouse working for Limited Co.
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prand

Original Poster:

6,244 posts

226 months

Monday 3rd October 2016
quotequote all
HI All,

I am in the process of asking my accountant, but find the "balanced" responses from PH helpful to test the water, so thanks for any advice/opinion in advance.

I run a limited company offering IT consulting services.

My wife wants to get get into contracting (she is already an employee being paid for various support duties already), is there any benefit of her invoicing through my limited company rather than her setting up her own?

I can see admin benefits, and saved costs on accountancy and insurance. Possibly even more IR35 respectability.

Also - would the work subject matter make a difference, say if she works in Marketing (covering Web & online content) as opposed to the company that was set up as one providing IT services - is it hard to change the scope of the Ltd co to include more general business consultancy?

Eric Mc

125,791 posts

295 months

Monday 3rd October 2016
quotequote all
When was your limited company originally set up i.e. was it set up pre 2008 when it would have been established under 1985 Companies Act Rules or post 2008 when it would have been set up under 2006 Companies Act Rules?

prand

Original Poster:

6,244 posts

226 months

Monday 3rd October 2016
quotequote all
was post 2008 - about 2 yrs ago.

Eric Mc

125,791 posts

295 months

Monday 3rd October 2016
quotequote all
Good - that means the old style "Objects Clause" that used to be part of a company's Memorandum and Articles of Association won't exist. These clauses could restrict what a company could do and in old style companies had to be amended sometimes to allow the company to undertake any new kind of business.

They were dropped as a requirement for small companies under the 2006 Act.

So, as long as the new activity is legal, then there is no reason why the company can#t conduct it.

If the new activity is substantially different to what the company has previously been doing, it could be looked on as a separate trade by HMRC. However, in the context of what the activity the company seems to be already doing, I don't think this "new" activity would cause a problem.

If your wife is generating income for the company through her personal activity, she should be made a director and, almost definitely, a shareholder too.

Don't be fooled into thinking that having two activities in a company somehow magically makes IR35 go away - it doesn't - it just changes the perception of the company a bit.

And finally, how you manage remuneration and dividends through the company will have to be worked out - probably in consultation with your accountant.


prand

Original Poster:

6,244 posts

226 months

Monday 3rd October 2016
quotequote all
Thanks Eric, sounds like some very sensible advice. I'll follow up with my accountant who should be able to help.


LivingTheDream

1,768 posts

209 months

Monday 3rd October 2016
quotequote all
What VAT scheme are you on?

May push you over the threshold for flat rate depending on rates etc so worth considering.

prand

Original Poster:

6,244 posts

226 months

Monday 3rd October 2016
quotequote all
LivingTheDream said:
What VAT scheme are you on?

May push you over the threshold for flat rate depending on rates etc so worth considering.
I'm on the flat rate scheme at the moment. As I understand it, although you can't join if your income is over £150k, the threshold to leave the scheme is £230k, so we should be ok for a bit.

jammy_basturd

29,778 posts

242 months

Monday 3rd October 2016
quotequote all
I have something similar recently. I want to use my current company (web development) to research and create an alcoholic product. I've been advised that I'll have to keep all accountancy records separately (Xero allows me to track income and expenditure against different codes), and that year end two different P&Ls would have to be drawn up as it's not possible to offset the losses of one trading activity against the profits of another.