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Average number of employees

If only a director in a limited company with 0 employees, how is this reported?

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Hi all,

I have a limited company (micro entity) with 0 employees and I am the only director. I only pay myself a dividend every year with no salary (this is for specific reasons). When filing accounts with companies house, I am asked the avererage number of employees in the year. The minimum I can put into this field is 1, however I would personally say the answer is zero based on the above. Does anybody know if I am classed as an employee in this case, or have I set this company up incorrectly, as I find it extremely odd I cannot put 0. I've done some research which suggests a limited company with only a director should be no issue.

Thanks in advance!

Replies (35)

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By atleastisoundknowledgable...
21st Nov 2019 17:30

I’d say 1

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Replying to atleastisoundknowledgable...:
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By CR123
21st Nov 2019 17:33

Thank you!

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Replying to atleastisoundknowledgable...:
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By Wanderer
21st Nov 2019 17:33

When we looked into this point we concluded 0.

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Replying to Wanderer:
RLI
By lionofludesch
21st Nov 2019 17:36

Hmm - if Companies House says it can't be 0, would you reconsider ?

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Replying to lionofludesch:
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By Wanderer
21st Nov 2019 17:40

Of course, BUT looking at the sh*te that is produced & filed by people using Companies House software to file FRS105 and FRS102 1a accounts then I attach little weight to what they say.

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Replying to Wanderer:
RLI
By lionofludesch
21st Nov 2019 17:56

Yeah - but this isn't about monitoring filings.

It's clearly their policy - with which I don't necessarily agree yet, on the other hand, don't really care about too much.

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Replying to lionofludesch:
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By Wanderer
21st Nov 2019 18:00

Not the monitoring point really. My point was that Companies House software produces accounts that are meant to be FRS compliant when they are clearly far from it.

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Replying to Wanderer:
RLI
By lionofludesch
21st Nov 2019 18:01

Fair comment.

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Replying to atleastisoundknowledgable...:
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By Wanderer
21st Nov 2019 17:48

Okay have looked up our notes.
Based on a Giles Mooney lecture Summer 2017 the notes we made said ".... but director who does not have a contract of that nature would not be counted and therefore results in zero employees".
Think we basically concluded that an un-remunerated director, without a service contract, isn't counted.

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RLI
By lionofludesch
21st Nov 2019 17:31

A director is a special kind of employee.

There is some debate about whether a director is an employee if he doesn't get paid or doesn't have a service contract. These are fairly esoteric arguments. I could easily justify both including and excluding you.

If it won't accept 0, put 1. It's not important.

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Replying to lionofludesch:
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By CR123
21st Nov 2019 17:33

Massively appreciate that, thank you!

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By jon_griffey
21st Nov 2019 17:44

There are National Minimum Wage and Workplace Pension implications in labelling directors as employees, i.e. having a contract of service. So surely the preferred number is '0'.

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By Tim Vane
21st Nov 2019 17:54

Put 1, which is more than the actual number of employees but also more than the number of people who will ever read it and way way more than the number of people who actually give a damn.

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Replying to Tim Vane:
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By Wanderer
21st Nov 2019 18:08

Thanks, laughed out loud at that!

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By darkmatter
21st Nov 2019 19:09

the earth will be burnt to a crisp in a few billion years .. so dont worry about companies house putting you in jail

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Replying to darkmatter:
By Red Leader
21st Nov 2019 22:34

darkmatter wrote:

the earth will be burnt to a crisp in a few billion years .. so dont worry about companies house putting you in jail


I know that Mel Brooks was the 2000 year old man, but I don't think CR123 will live to a few billion years.
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By johnt27
22nd Nov 2019 10:58

Unless you have an employment or service contract the number to disclose is 0. Others will argue that substance over form expects you to disclose 1 and TBH nobody gives a [***].

If you can only put in 1 do it and forget about it. Nobody will pull you up on this, unless they're uber techy, certainly not Companies House or HMRC.

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Caroline
By accountantccole
22nd Nov 2019 13:25

Last SWAT course we watched highlighted people were getting it wrong and told us that directors counted as ees for this disclosure

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By JCresswellTax
22nd Nov 2019 14:18

Wow - all of these responses and not one which says 'what does your accountant say?'.

What has happened since I have been on holiday...?

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Replying to JCresswellTax:
By Tim Vane
23rd Nov 2019 00:59

JCresswellTax wrote:

What has happened since I have been on holiday...?

Ask your accountant.

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By CWservices6064
22nd Nov 2019 15:15

Companies Act 2006 (S411) states number of persons employed under contracts of service.

IRIS has a useful link

https://www.iris.co.uk/blog/how-to-get-it-right-when-disclosing-average-...

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Replying to CWservices6064:
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By lionofludesch
22nd Nov 2019 15:25

It says directors are to be included but non executive directors aren't.

Which begs the question - can a company have only non executive directors ?

I would suggest no. Someone has to do the directing.

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Replying to lionofludesch:
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By CWservices6064
22nd Nov 2019 15:33

Yes, IRIS actually contradicts how I see it i.e. 0 unless there is a contract of service.

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By andrew1211
26th Nov 2019 11:48

It is 1...the end

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By pauljohnston
27th Nov 2019 09:51

Its 1 since directors are assumed employees by HMRC. If it was 0 I am not sure how a director could reclaim expenses nor run a mobile phone out of the company bank account etc

I am so pleased to see see that such a simple point is made difficult by civil servnats. Time for a cull at Companies House me thinks.

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By George the Greek
27th Nov 2019 10:00

I would argue that you can be a "post holder" director who is not a hired hand (an employee). Another example of this, believe it or not, are Vicars in the church of England. They are often (but not always) entitled to a monthly stipend but they have no employment rights whatsoever as they are not employees.

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By petestar1969
27th Nov 2019 11:03

If it won't let you put zero then that's clearly the wrong answer. As others have already said, no-one really cares, so put 1 and move on.

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By geoffmw1
27th Nov 2019 13:11

Unless the director has enough employment or self employment income elsewhere to make sufficient NI contributions to build up state pension, taking all income from the company as dividend is not sensible.

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By [email protected]
29th Nov 2019 10:21

Why do they ask the question? Presumably they crunch numbers and provide government with statistics about how many companies have fewer than 10 employees, how many employees the average company has and so on.

Clearly there's a flaw in the software because the original systems analyst didn't know that it's possible to have an active company without any employees; so you're forced to give an answer which is more than zero. In short, you're forced (by their mistake) to give an incorrect answer. But in the great scheme of things, it makes no difference whatsoever, and no blame can be attached to you for giving incorrect information.

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Replying to [email protected]:
RLI
By lionofludesch
29th Nov 2019 10:34

george.gill-AT-themacds.com wrote:

Why do they ask the question?

Perhaps it's to see if they need an audit or are eligible to file FRS105 accounts or summat.

Who knows what the Government thinks ?

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By Agutter Accounts
23rd Dec 2019 15:35

Micro-entity accounts require only the minimum of information. I'm a limited company with just my wife and I as directors and we only take dividends. I set up as a limited company for tax reasons only, as many freelancers do.

I only provide such information as is specifically required, and don't worry about finer technicalities. Which in micro-entity accounts is very little.

Quite frankly, is anyone particularly bothered if your number of employees is 0 or 1? And are you going to get a slapped wrist for saying 1 when it's arguably 0? Nah. People have better things to do with their time.

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Replying to Agutter Accounts:
RLI
By lionofludesch
23rd Dec 2019 15:49

Agutter Accounts wrote:

Micro-entity accounts require only the minimum of information. I'm a limited company with just my wife and I as directors and we only take dividends. I set up as a limited company for tax reasons only, as many freelancers do.

I only provide such information as is specifically required, and don't worry about finer technicalities. Which in micro-entity accounts is very little.

Quite frankly, is anyone particularly bothered if your number of employees is 0 or 1? And are you going to get a slapped wrist for saying 1 when it's arguably 0? Nah. People have better things to do with their time.

Well, all that's nice, but largely irrelevant.

The minimum of information includes the number of employees so you need to consider it.

I've no idea why you consider your family tax position as of any import to deciding how many employees your company has.

Is anyone going to check ? - you're right there, no one at Companies House will.

But for those of us who are regulated by a professional body, we might well get the proverbial slapped wrist for getting it wrong, so, it is important to us.

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Replying to lionofludesch:
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By andrew1211
23rd Dec 2019 15:54

Utter tripe.....no one cares and it is not important, not even to the Regulators, whether it is 0 or 1. Do you think they come in and start looking at that specific issue....they do not as they have bigger issues to look at, and rightly so?

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Replying to andrew1211:
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By lionofludesch
23rd Dec 2019 16:07

Oh.

Maybe my standards are just higher than yours, then.

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Replying to lionofludesch:
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By andrew1211
23rd Dec 2019 16:12

Not really, I just get the bigger issues correct.

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