Anonymous
Share this content
11

Sole trader and own ltd- commercial transactions?

Didn't find your answer?

I work for a ltd company incorporated in Feb2020. In the past 6 years, my director traded as sole trader, vat registered business, and paye registered employer with 10 employees.

he then incorporated the ltd ( both vat and paye registered ) with the aim to take over the old business with all employees etc, but then COVID happened and things were put on hold

All customers were notified and new suppliers credit accounts were created for the limited, however due to COVID and the furlough scheme , some old employees remained on the sole trader business  while others were gradually employed by the ltd. 

now, the ltd has various contracts in place and wants to subcontract some work to the sole trader and bring back their employees from furlough. 
can this be done? 

so, there are two vat and paye registered business, one sole trader and the other one ltd, different employees but there will be a commercial relation between them??!! I am not sure if it's ok for the ltd to have all the customers and the sole trader to work for the limited, even if both are vat registered.

thanks in advance 

Replies (11)

Please login or register to join the discussion.

avatar
By Truthsayer
06th Mar 2021 16:54

Ask yourself whether this mess is your problem. If the director is daft enough to have done this, you might best be advised just keep your head down and let him carry on digging himself deeper. If you advise a change of course, a fool such as this might well reward you with a tantrum and a P45.

Thanks (1)
Replying to Truthsayer:
avatar
By Paul Crowley
06th Mar 2021 17:25

I agree
Kings are well known for shooting the messenger

Let the accountant solve these issues

Thanks (1)
Replying to Paul Crowley:
avatar
By Tax Dragon
06th Mar 2021 18:32

It's, who knew?, a situation that can (and no doubt will) get discussed on Aweb* but resolved only by the director, who should have taken (and for all we know did take) tax, accounting and legal advice before Feb 2020; but needs to (again) now.

*this time, by none of the relevant persons.

Thanks (1)
RLI
By lionofludesch
06th Mar 2021 17:15

Apart from getting into a bit of a pickle, is there any genuine commercial reason for having two trading entities ?

Thanks (1)
Replying to lionofludesch:
avatar
By Fiorre
06th Mar 2021 17:38

Yes, I do believe so. The sole trader business become so big ( about £600k in revenue, I’ve heard ) that he decided to incorporate the ltd to take over.

If he were to dismiss the employees now and re-employ them on the ltd, these will lose the eligibility for cjrs and what the sole trader is invoicing is actually the wages costs. The reason is genuine, but the practice “unorthodox “ , if I might call it so

I am curious to hear what the accountant has to say ...

Thanks (1)
Replying to Fiorre:
RLI
By lionofludesch
06th Mar 2021 17:49

Quote:

Yes, I do believe so. The sole trader business become so big ( about £600k in revenue, I’ve heard ) that he decided to incorporate the ltd to take over.

Lovely. But I didn't ask that question. I asked why you wanted two entities.

Quote:

If he were to dismiss the employees now and re-employ them on the ltd, these will lose the eligibility for cjrs....

Best check that. Though I'm beginning to see why you think you need two entities.

Quote:
......and what the sole trader is invoicing is actually the wages costs

Wages ? Or wages + VAT ? Or market vale of the labour + VAT ?

Including NI costs ? And pension costs ?

Thanks (1)
Replying to lionofludesch:
Routemaster image
By tom123
06th Mar 2021 18:45

It's almost as if TUPE didn't exist..

Thanks (3)
Replying to tom123:
RLI
By lionofludesch
06th Mar 2021 19:07

Quote:

It's almost as if TUPE didn't exist..

[chuckle]

Thanks (0)
Replying to tom123:
avatar
By Paul Crowley
06th Mar 2021 21:27

Agreed
@OP TUPE makes furlough work

Thanks (1)
avatar
By Paul Crowley
06th Mar 2021 21:40

@OP
You have outed yourself
Could be best to change your profile as company name visible

This is one where Anon totally within the rules
Alternatively
Get Mods to fix it

Thanks (1)
Replying to Paul Crowley:
avatar
By Paul Crowley
07th Mar 2021 13:57

All sorted

Thanks (0)
Share this content