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LTD or SE?

Thoughts please....met a new client yesterday. He has been running his own little part time business since August 2018. He registered as a limited company but upon discussion there is no need for him to operate in this way and he wants to be just self employed and not be tied to all the requirements of a limited company for such a small operation. He did register as an employer and has paid himself. Initially I said it made no odds if he classed himself as self employed since he started up until end of this tax year as nothing submitted accounts wise anywhere yet of course and the Ltd company can just be struck off if he likes or left dormant etc. If he has been paying himself via the Ltd business can i get around this and still class him as simply self employed since last August - over thinking is confusing me

Thanks, Sandy Hoy

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By Matrix
20th Mar 2019 16:21

Well is the limited company dormant or not? If it was trading and paid an employee then you will need to square it all off with HMRC and close down the company, assuming it has ceased trading now.

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20th Mar 2019 16:23

You could have effectively ignored the company if it hadn’t registered as an employer and paid salaries.

Close the scheme, wind up the company and continue as SE from today.

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By DJKL
20th Mar 2019 16:27

Was salary submitted to HMRC in Real Time when paid might be worth considering re his tax return at year end.

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20th Mar 2019 16:30

Sometimes you just have to do stupid accounts for stupid clients, not soothe them as if they've grazed their knee falling down on the first day of school.

Saying that 'it made no odds' strikes me as foolish without full disclosure of the facts. Facts are short in your question, too. For example, who did customers and suppliers think they contracted with? Why would they think that? What do his sales invoices show?

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21st Mar 2019 08:58

I vote no.

He's gone too far down the line of being a company.

The bright side is that, if he intends to wind up the company, the administrative burden won't be huge. He won't have to file Companies Act accounts and he can file a much more simplified version with HMRC.

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By marks
21st Mar 2019 21:06

First need to establish if the company is dormant or not.

Does appear to be if he has registered as an employer and has paid himself. Question will be if anything has been submitted to HMRC when paying himself eg RTI submission, PAYE/NIC payments.

Other matters to consider are

1. Is there any bank account in the name of the limited company? If so is there any activity on it? If so the company is trading?
2. Seems that he has been trading since August 2018. Has he issued invoices to his customers? Are the invoices in the name of the Ltd Company? If so then company has been trading?
3. Has there been any purchase invoices/receipts in the name of the limited company? If so the company has been trading?

The fact that accounts to date havent been submitted is irrelevant.

The important points to establish are the above. If any of them are true then company has traded and will need to submit accounts at least to date (settle any debts due) then 3 months after ceased trading then can wind the company up.

If none of the above has happened eg the bank account is in his name or he is just paid cash, he issues no sales invoices, and any purchases/expenses are in his own name then the company hasnt traded and can just be wound up and will need to declare activity as self employed.

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