Ltd company and subcontractor in CIS

0149witty

I have a client with a ltd company, but they are not very good with admin etc, they have been given the opportunity to work for a contractor as a sub contractor in the construction industry scheme doing the same job/work. He can’t close his ltd company yet because he still has dividend and cop tax bills to pay for this year. Would there be any restrictions with HMRC because he has ltd company and self employed at the same time. I know you can’t have a ltd company and a self employed company with the same trade, but hoping this would be different as it’s working as a sub for a contractor. Any help or advice would be welcome.

0149witty

Just to add to the above, as it’s a little confusing, would he need to put the subcontractor pay through his ltd company as income. Or could he do this totally separate as self assessment sole trader. It’s the same type of work.

douglasstroud

Who says you can not have a Ltd Co and be self employed in the same trade ?? whether that is sensible or not is another question
It is not confusing at all, they either work as a sub-contractor through the Ltd Co or they do it as a sole trader

0149witty

Thanks for your response, so my client can do either. I know it’s more tax efficient to do it through the ltd company, but he just isn’t keeping up with all the paperwork and getting into a mess. This means I can now give him the option to choose if you wants to put the pay he receives as a sub contractor through his company or put it separate as a sole trader.

douglasstroud

He can do either, however it is the VAT situation he needs to consider because of the same trade, HMRC will more than likely consider both businesses aggregated for the VAT threshold

0149witty

No vat involved so it should be straight forward. Thanks for your help