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Employment allowance and connected companies

Employment allowance guidance from 2020

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https://www.gov.uk/government/publications/employment-allowance-more-det...

My head is only just recovering from January so trying to get my head around this one!  The way I see it is

2 companies that both have 50/50 husband and wife ownership would not be connected under item 2, but would be under item 6

If those companies were owned one by Mr and the other by Mrs they would not be connected but consideration would need to be given to item 3 which could make them connected.

Here is where it gets interesting - what happens if Comp A has 3 equal shareholders A, B and C and Comp B has equal shareholders A, B and D, A&B are the minimum controlling group and so they are connected

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By Duggimon
27th Feb 2020 12:01

I agree with you, going by the guidance linked, though if they were clearly two entirely independent separate business I might consider arguing the case, I'm not sure what the legislation has to say about it but I bet it's not identical to what that page says.

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By whitevanman
27th Feb 2020 12:43

Not sure why you would be willing to argue a case when you don't know what the legislation says!
It is all fairly standard "control" stuff for companies and has nothing new (presumably based on same legislation?).
If there were 2 "entirely independent, separate, business(es)" why would they be connected? Answer, because they are under common control (as defined in the guidance and legislation). The only time the "entirely separate businesses" point becomes relevant, is where there is an attribution of rights and then you look at the "commercial interdependence" issue (again as set out in the guidance).

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By Duggimon
02nd Mar 2020 10:23

Considering a thing and doing a thing are not the same! My reply was intended as a suggestion to look up the actual legislation rather than rely on HMRC guidance, which is so often flimsy and vague.

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By JB17
02nd Mar 2020 14:20

Afternoon,
apologies for taking the thread on a slightly different but relatable tangent...
I've just received correspondance saying the rules for 20/21 have changed and that you can only claim the £3k allowance if your total (secondary) Class 1 National Insurance contributions (NICs) liability is below £100,000 in the tax year before the year of claim. It doesn't state whether this £100k applies to per entity or as a collective if parties are connected (we are a connected group of 8 companies so have historically claimed 1 x allowance each year).

So I rang HMRC PAYE helpline and the guy didn't have a clue about the upcoming changes!! so after directing him to the HMRC link and after being put on hold I was advised under these new rules we wouldn't be eligible to claim any as the £100k is the COMBINED liability for all connected parties, not per entity.

Has anyone else had conflicting advice or even had notification from HMRC/Payroll company about these changes??
Regards
James

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