Director and self employed

  • Thread starter Dirk Bruere at NeoPax
  • Start date

M

Martin

Dirk Bruere at NeoPax said:
Can I bill a company as a self employed person if I am a non-salaried
director of that company (and shareholder)?
Yes. Ensure the company makes the necessary "transactions with directors"
etc disclosures in its accounts.
 
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R

Ronald Raygun

Dirk said:
Can I bill a company as a self employed person if I am a non-salaried
director of that company (and shareholder)?
I don't see why not, in principle, but it would be subject to the usual
rules which distinguish employment from self-employment.

What sort of activity are you thinking about?

If this is essentially a one-man business (you're the only shareholder),
wouldn't it be more advantageous just to vote yourself a bigger dividend?

If there are other shareholders and you don't want them to get the same
dividend per share, you could perhaps restructure the shares into
several classes, and ensure you are the only holder of shares of a
particular class, then you can vote enhanced dividends just to share
holders of that class.
 
D

Dirk Bruere at NeoPax

Ronald said:
I don't see why not, in principle, but it would be subject to the usual
rules which distinguish employment from self-employment.

What sort of activity are you thinking about?

If this is essentially a one-man business (you're the only shareholder),
wouldn't it be more advantageous just to vote yourself a bigger dividend?

If there are other shareholders and you don't want them to get the same
dividend per share, you could perhaps restructure the shares into
several classes, and ensure you are the only holder of shares of a
particular class, then you can vote enhanced dividends just to share
holders of that class.
There are other shareholders and directors.
Most of my income is from other projects as a self employed engineer and
nothing to do with the company.

--
Dirk

http://www.transcendence.me.uk/ - Transcendence UK
http://www.theconsensus.org/ - A UK political party
http://www.blogtalkradio.com/onetribe - Occult Talk Show
 
P

Peter Saxton

There are other shareholders and directors.
Most of my income is from other projects as a self employed engineer and
nothing to do with the company.
That doesn't answe Ronald's question: "What sort of activity are you
thinking about?"
 
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R

Ronald Raygun

Dirk said:
Activity?
Engineering consultancy.
OK. It wasn't clear [1] from your earlier post that you were proposing to
work for your company in a similar capacity (i.e. engineering consultancy)
to that in which you are already working for other clients. That being the
case, this would seem to be totally in order. There should be no danger [2]
of your being considered to be an employee of your company if you were not
also treated as an employee of your other clients.

[1] It could have been the case that you were proposing to do administrative
work for your company, related to your role as director. In that case, it
might be more difficult to argue that you weren't really an employee.

[2] provided the role of your company is as genuine consumer of your
engineering consultancy services, as opposed to you working under the
umbrella of your company to provide consultancy services to your company's
customers.
 
M

Mike Lewis

Ronald Raygun said:
I don't see why not, in principle, but it would be subject to the usual
rules which distinguish employment from self-employment.

What sort of activity are you thinking about?
I think that in addition to the normal things about distinguishing
wmploymwnt from self employment you must be able to distinguish your self
employed responsibilities from those of your directorship and also from any
employed duties you have. So for example, and to take a few obvious
examples, you could not invoice for attendance at board meetings or for
preparing financial statements. You have to be able to point to and explain
why some things are part of your duties as a director and others are duties
under your self emplyed contract

Keep in mind that the revenue are likely to look at this very closely if
they doscover it.
 
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S

Simon

Mike Lewis said:
I think that in addition to the normal things about distinguishing
wmploymwnt from self employment you must be able to distinguish your self
employed responsibilities from those of your directorship and also from
any employed duties you have. So for example, and to take a few obvious
examples, you could not invoice for attendance at board meetings or for
preparing financial statements. You have to be able to point to and
explain why some things are part of your duties as a director and others
are duties under your self emplyed contract

Keep in mind that the revenue are likely to look at this very closely if
they doscover it.
Mike is correct here, I have at least a dozen such cases in my team at
present. The problem is that employment does not need to exist, as a
director is an office holder and therefore income from that role is taxable
under ITEPA and PAYE Regs. NIC rules are equally specific and remember, tax
law does not differentiate between executive and non-executive director.
Also, HMRC would look at the overall terms, so if someone owns a majority
shareholding, works nearly full time but is paid nothing, and then pays a
huge fee as consultancy fees for very little work, then they would challenge
this.

It is possible for a director, who is in business in his own account who
then offers his services "in this capacity" to the company in which he is a
director provided the work is offered under comparable terms.

so the question is, is it worth the risk of being noticed 5 years down th
eline and the company having to fund fees to counter such an argument and a
possible bill for tax, NI, interest and penalties if you are found to be in
receipt of employed or deemed employed earnings.

Simon
 

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