Hi All
I have just started in a new role in business and have been asked to review certain operations.
An LLP operates as a staffing agency in the construction industry. The LLP is registered as a sub-contractor under CIS and has Gross Payment Status.
It has been suggested that the LLP should restructure so that the ordinary partners are Ltd Companies, the directors of which would be the workers (bricklayers, plumbers, general trades etc) provided to the end contractor(s) via an agreement with the LLP (the designated partners are two other companies within the business group). The payments made to each Ltd Co partner as their profit share would be based on the hours their directors had worked on any of the engagements, with any remainder being the share to the designated partners. The Ltd Co's income would be solely from their profit share and they would then pay their directors through PAYE in full (no dividends etc) so each Ltd Co would end up with nil profit.
The questions that immediately come to mind are: -
1. Do the Ltd Co partners each need to be CIS registered? (I have queried this with HMRC CIS helpline and they weren't sure, but thought probably not).
2. Does the profit share paid to the Ltd Co's fall into IR35? (I believe it does)
3. If the profit share is under IR35, who would be liable for the deemed payment - the LLP or the Ltd Co? If it is the Ltd Co, would this then be mitigated by the fact that all remuneration had been paid out via PAYE, with all associated tax and NI paid over.
4. If it is IR35, would the Ltd Co's be able to claim the National Insurance Employers Allowance?
This is my first post, so apologies if it is a bit long winded.
Any thoughts would be much appreciated.
Thanks in advance.
