www.iva.co.uk

Hey everyone,

I though of an interesting scenario a few days ago.

I've previously been director of a Ltd Company (of which I was 100% sole shareholder).

I am now in an IVA and am self-employed. Are there any restrictions if I was to for example; turn my sole trading into a ltd company? How would this look on my IVA? There are a lot of tax benefits and personal security benefits from going Ltd. However as it is a company, I would pay myself a wage. What would happen to the rest of the profits within the company? Would I be told to turn over all surplus profits ? (taking into account running costs etc). Would they have a legal basis to do this?

FYI: I have no intention of doing this, at least not for a long long time and only if business takes off.

Also the basis behind this question is in no way, a way to 'hide' money from the creditors I owe. I am just querying the possibility of this scenario.

Thanks in advance

There is nothing at all to stop you turning your sole trader status into a Ltd Company.

I have a Ltd Company and pay myself a wage which helps out with I&E reviews etc, however I had mine when I started the IVA and my IVA has a clause that any profits over a certain figure must be paid into the IVA.

Another scenario you have not mentioned is that as an employee of your own company then you could pay yourself a wage for your I&E purposes and then pay yourself O/T - bonuses every now and again, the O/T - bonus would be subject to the 10% 50/50 rule so you would end up with more of it in your pocket than if it had all been treated as your weekly pay....

I think that a clever IP would spot that loophole nickjohn, and not accept that your suggestions was fair-play.

There's little to stop starting a ltd company, with you being PAYE to the company, before, during or after an IVA. And of course there are many benefits that go with that whilst in an IVA. It's not so much as a loop hole as business acumen the ltd company is its own entity and it gains and losses are pretty much kept to itself, Yes it controls pension, car, exes and of course salary control n stuff, all quite handy… But the endless unpaid hours, tax, vat, NI, company NI, corporation tax, accountants wanting receipt for a postage stamp (reaaalllly…), supplier failures, customers coughing up, customers going bust, customers throwing toys on floor, and a general good grinding out of your soul by the end of the month, sort of balances things out… Although when its going well it's hard to beat

That is completely incorrect sponge. Limited company accounts will be reviewed by the IP acting, and a debtor will not be permitted to build up reserves in the company at the expense of their personal creditors.

It depends how it's structured, it’s only those with the wherewithal, who want to run a ltd company in a serious way and probably is beyond to any useful discussion on the forum. I don’t want posters getting the wrong idea, but to underestimate, I wouldn’t.

Nickjohn
As you run you own ltd business, if you’ve not done so might be worth checking out what a SSAS is. If it wasn’t for the fact it’s registered with the pension regulator & hmrc you’d think it was scam!