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Create a seperate company for the IR35 contract

Create a seperate company for the IR35 contract

Our client has been operating through a LTD company offering gas maintenance and services to the leisure industry, namely on boats. The company also had a contract with Fords Dagenham which was an IR35 friendly contract which is now coming to an end. As the income from the leisure industry has increased they have always wondered if this should be housed in a separate company, the revenue from this is not 50% of the turnover.

The new contract which has now been offered would be classed as high risk when you look at HMRC guidance, they are now considering the posibility of housing this new contract in its own separate company to keep it away from the leisure side. This could either have wife as shareholder/director or husband.

This would obviously benefit them when the paye tax and NI, IR35 calculation is performed, but would they have problems with HMRC with this structure.

Does anyone have any thoughts on this or carried out something similar?


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30th May 2012 13:40

You miss the point

Putting the risky work in a separate company achieves nothing except a great deal of extra paperwork and accountancy fees.

It is each individual engagement that may or may not be liable to IR35 treatment. The fact that there are some "dangerous" contracts has no bearing on the "safe" income.

Repeat: it is not the comapny's income that is liable to IR 35 treatment. It is the income from "dangerous" contracts .


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