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Holding Company

Managing payroll for connected company

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one of my clients has three limited companies and planning to open the fourth one soon.

Each company has an average of 13 employee per year.

The payroll is run on a weekly basis it takes time especially if one employee or two moving from one company to another.

I thought it may be good to set up a holding company where it owns the three limited companies and then run the payroll through the holding company.

There is many benefits including if an employee moves from one company to another the holding company will not issue P45 because all sub’s will be under one payroll scheme.

There might be other benefits from setting up a holding company, I have not come across this before and I will be very grateful if someone can give some guide.

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Hallerud at Easter
By DJKL
13th Sep 2019 22:10

I used to get around the issue by having one entity as "the employer" and it rebilled the others for labour, however how vat dealt with (vat Group?) needs considered/addressed. Luckily we are now down to a payroll of one- me- and now only three main operating entities so not that tricky re allocating my cost- these days I split by respective rental income received by each entity although other metrics used to apply when we were more involved with property development.

The key point is can you identify scope of work done for each entity?

Thanks (1)
Replying to DJKL:
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By atleastisoundknowledgable...
14th Sep 2019 10:32

DJKL wrote:

I however how vat dealt with (vat Group?) needs considered/addressed.

Isn’t it the case that it you recharge literally just for gross wages, e’ers NI & e’ers pension (and state as such on the invoice), then there’s no vat?

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Replying to atleastisoundknowledgable...:
Hallerud at Easter
By DJKL
14th Sep 2019 13:01

Yes, paymaster provisions. (3.3)

https://www.gov.uk/guidance/companies-that-supply-staff-and-staff-bureau...

If you charge a management fee for the service I think that is a distinct vatable supply

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Replying to DJKL:
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By Malek
14th Sep 2019 11:19

Thanks,
This means the three entities payroll will be under one payroll scheme “the employer company” - what about the average number of employees in the set of accounts for the other entities?
It possible to have high labour cost in the P&L and no employees headcount?

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Replying to Malek:
Hallerud at Easter
By DJKL
14th Sep 2019 18:54

I think if an employee (delete member )was substantially used in one business I would treat them as such re head count irrespective who operated the PAYE scheme.

To tell you the truth these days I am not sure at what level the average number note becomes obligatory and when it is voluntary, my interest in company accounts disclosures has really waned as I have aged.

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Replying to Malek:
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By Bobbo
16th Sep 2019 14:20

Who will be the actual employer of the staff?

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By WhichTyler
15th Sep 2019 07:25

You could also look at joint contract s of employment so they are employed by all group companies and you don't need new contract when they do some shifts at another branch.

Either way a holding company is not necessary

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By paul.benny
16th Sep 2019 09:40

Not the questions being asked
a) Why does your client want/need so many companies?
b) What would be the point of a holding company? Partly depends on the answer to a) but creates additional overhead without there being any inherent benefit.

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