Self Emp relief if went Limited in October

Client was self employed but went Limited in October 19 - any relief available?

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My client was self employed from 2016 to 2019 averaging 28,000 trading profit per annum.  As the business has grown it made sense to set up a Limited Company to create some tax saving. We did this in October 2019. Since then she has started to trade via the Limied Company.

So self employed income up to October 19 will go on her 19/20 tax return.

Looking at the list of conditions for self employed people to claim the 80% help from the government I fear she could lose out because although she had self employed trading income in 19/20 she won't in 20/21 unless she invoices a few jobs as self employed after April 5th.

Is that a correct analysis and would it be inappropriate to invoice a few jobs as a self employed person and a few through the Lomited Company after April 5th?

Replies (9)

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By ohgoodgodno
28th Mar 2020 10:06

your client is employed by her limited company and not self employed - she's not trading as a sole trader in 20/21 and not eligible for the SEISS

whilst it may be tempting to put a couple of invoices through as self employed, you don't want to encourage your client to do anything thats fraudulent

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By Sanjeev Nanda
28th Mar 2020 11:39

This is like using the right steps to a formula, but reaching a completely different solution. I Agree, though, the fine text on this ruling a bit blurry. Nobody could've seen the beginning, nor can you see the visible end of this Coronavirus (Covid-19) pandemic. Technically you CAN invoice yourself as self-employed, but it's advisable not to. I have no idea how strictly this entire ordeal would be scrutinized.
~Sanjeev Nanda

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By SXGuy
28th Mar 2020 11:53

Hold up. Where's the argument for a going concern when incorporating after being self employed? I get that the client is not technically still trading as self employed, but what about the goodwill transfer on incorporation? Is that not considered a continuation of trading?

And unless I've missed it, self employed profits are up to 18/19 not 19/20

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By Martin Schneider
28th Mar 2020 11:54

Guidance at gov.uk tells us you would still have been trading if not for CV19 and must still be intending to trade for 2020/21. Although your client could probably try and pull the wool over HMRC's eyes, it's clear that, sadly, they won't meet the criteria apart from potentially the furlough grant on their own wages (once we get clarity from the top, and not Martin Lewis...)

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By soundadvice
28th Mar 2020 11:56

My thought Sanjeev was that maybe her first few invoices to customers after April 5th could be issued by her as a self employed person rather than through the Ltd Co. She has not done her 19/20 tax return yet which will include her self employment income up to October and would normally include an end date for self employment.
If she didn’t do that then at the moment it looks like she is going to get no support at all which I’m sure isn’t the the intention of the government.

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Replying to soundadvice:
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By Accountant A
15th Jun 2020 20:31

]98y

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By Truthsayer
28th Mar 2020 12:56

'would it be inappropriate to invoice a few jobs as a self employed person'

Do you actually need to ask whether raising blatantly fraudulent invoices is inappropriate?

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By JimLittle
28th Mar 2020 14:39

I know you are trying to find solutions for your client but what you are suggesting is incorrect and unethical.

My concern is unscrupulous individuals will always find ways to get around the rules.

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By soundadvice
28th Mar 2020 14:56

Very good feedback thank you.
It’s good to be able to bounce ideas off other people; there are so many questions in these unprecedented circumstances.
You are trying to find ways to help your clients many of whom are really struggling and getting second and third opinions that highlight what is and isn’t reasonable is very helpful.
Thank you

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