Apologies for starting another, but I didn't want to hijack Daga's thread.
Assuming this is what is happening:
Four subcontractors where employed by Company A. To save employers NI the subbies formed Company B and are recharging the Company B as self employed consultants. But Company B only has one customer Company A.
I've got a few questions I'd appreciate comments on:
1. Can a ltd company only have one customer? Would HMRC argue that really "company b" is an employee of A
2. The Directors of B are actually employees of A. This is because in the first instance they are employees of B and not Directors.
3. If B had more than one customer would the Directors be just classed as employees of B.
4. Why didn't the Directors of B just pay themselves the minimum pa and pay the rest in dividends.??
OR am I talking nonesense
-- Edited by ADAS on Tuesday 15th of February 2011 02:49:51 PM
__________________
Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
1. It could be argued that a Ltd company can only have one customer. But you would need to have strong reasons why. eg you are actively out seeking to get other customers. If this isnt the case and you just have one customer and you are doing nothing else then would point to IR35.
2. Not sure what you mean
3. No if more then one customer would make them more like employees of B
