I have a sole trader client who works in the construction industry, I am about to apply on his behalf for gross status as he passes all the requirements and should be accepted no problems.
However he is also thinking of incorporating, if he was to do this after achieving gross status as a sole trader would this mean that the Company could also apply being that he is the only director and he would have already qualified or would the Company have to wait the 12 months for the turnover test and apply themselves.
Just wondered if anyone else had come across this or had any views
Many thanks
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Hi Doug
You know I dropped all my CIS clients a few years back so this is just some general views/Qs.
Does he do payroll as well? (Is the UTR the same as a payroll one? Sorry Im probably being a bit dim on that one - just cannot recall if its one and the same if he has no payroll, only had them when they had both!)
Why is he incorporating? (the reason Im asking is the justifcation you would add for the next Q/to ensure its not a tax avoidance thing!) Are you approaching HMRC for clearance for this incorporation?
Am wondering if you can transfer the payroll UTR from sole trader to Limited. Normally you set up new, but if employees are being transferred from one PAYE scheme to a new one it couldbe treated as succession possibly. See this www.gov.uk/hmrc-internal-manuals/paye-manual/paye30045 (Ive not ploughed through it, just too bombed with weeks worth of work to catch up on!).
Wondering if its all worth wrapping up in the clearance issue - worth a call to CIS/Employers helpdesk and if you can find a number to the clearance team as well, before you put it in writing.
Sorry more Qs than As!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Oh actually Ive just seen the succession comments in CIS as I was closing the tab down!!!!!!!
Worth a call I would say, as whilst I normally say dont believe, blur blur, the CIS team are the best lot. You could always get a case reference number thingy for your call.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks for the reply, no payroll he has just been subbing himself through various contractors but he has just landed a big job but will need to get some help in to complete hence the application for gross status to avoid being taxed at the 20% and then having to deduct again from the subbies which in itself would not be a problem as he passes all the requirements.
With the incorporation purely commercial reasons, he wants to expand the business and also wants to start providing a lot more of his own materials through his own suppliers instead of the contractors supplying them, so not sure if the Company will have to be trading for 12 months before it can apply for gross status but at least if it does then in the meantime the CIS can be offset.
As you say the CIS team are pretty good and always been a great help so might just run this past them tomorrow.
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Am wondering if you can transfer the payroll UTR from sole trader to Limited. Normally you set up new, but if employees are being transferred from one PAYE scheme to a new one it couldbe treated as succession possibly. See this www.gov.uk/hmrc-internal-manuals/paye-manual/paye30045 (Ive not ploughed through it, just too bombed with weeks worth of work to catch up on!).
Hi Joanne
I think you're mixing up utr's and paye numbers. You can transfer a paye scheme from s/e to Ltd co as per your link but the gross status isn't connected to the paye. When you become Ltd you get a different utr and it is this which gross status is decided on. Whether HMRC will look at the Director rather than the company I don't know, but good advice to contact the CIS team, who I have found to be really helpful.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Spoke to the CIS helpline and they said that if my client already has gross status as a sole trader then as long as it can be shown that the Ltd Co will be run by the same person then it will be basically treated as a continuation of the same business, they would allow the gross status to be carried over after a letter in writing giving all the relevant information.
Thanks for the help
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Am wondering if you can transfer the payroll UTR from sole trader to Limited. Normally you set up new, but if employees are being transferred from one PAYE scheme to a new one it couldbe treated as succession possibly. See this www.gov.uk/hmrc-internal-manuals/paye-manual/paye30045 (Ive not ploughed through it, just too bombed with weeks worth of work to catch up on!).
Hi Joanne
I think you're mixing up utr's and paye numbers.
Oops. Losing the plot!!! Sorry folks!!!!!!!!!!!!!!!!!!!!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
