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Client thinking of winding up limited company

Hi all

I have a client who is thinking of winding up his limited company and becoming self employed. The turnover is approx £150,000, he has a PAYE scheme which pays him and his wife. I think he is thinking that if he stops being limited that "tax matters" will become simpler, but my thinking is that he will still have to be VAT registered, still have to have a PAYE scheme and be liable for Class 4 NICs on profit as a sole trader.

Any thoughts?

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16th Apr 2012 14:50

Difficult to say with information provided

Matters will be simpler.

Who would own the business? Husband or husband and wife. Other than payroll I agree with you. Payroll decision depends on ownership. The decision should be based on profits rather than turnover. The simplication and accounting fees should be taken into account also.

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20th Apr 2012 17:53

Comercial and other factors

Don't forget to weigh up the commercial and other factors of having a company v being self-employed / in partnership.

Brand, impact on customers/suppliers, status.

Payroll will only be required if there are employees ie if client becomes sole trader with spouse employed. If H&W are in partnership - no employees - no payroll.

There's also the getting the money out of the company to consider - ESC16 is no longer available and so the replacement statutory provisions apply.

Assets owned by company - may lead to double tax charge. Also BIKs disappear if no employees.

Maybe worth looking at starting a new unincorporated business and winding down the activities in company over time.

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