Invoicing your own company
Question asked by Anna Borkim 7 years ago
The director is a chef and has catering ltd company, can he become a self employed chef and invoice his own company?
Hi Anna - the only time I've worked with this sort of arrangement is if the director has an existing self employed business and the company is similar to his/her existing customers. In this way HMRC would see the arrangement with the company as being a commercial decision.
if there's any hint that this is happening to avoid having to show a salary or dividends as a director/shareholder, HMRC would see it as an engineered avoidance scheme. Even if a self employment were OK, if part of his duties involved running the company, it would be sensible to process a salary through PAYE for that element.
Just general advice and so, as Tommy says, best to discuss in more detail with an accountant.
Best answerHi Anna - you may have already checked this out but many years ago legislation was brought in to combat people working for companies (clients) through their own Ltd companies (intermediaries) where the services and duties they provide to the client company by the worker would ordinarily been seen as being provided by an employee.
The legislation is known as IR35 and it's effect is to ignore the Ltd company in the middle and insists that 95% of everything the intermediary invoices the client for the worker's services must be accounted for under PAYE in the intermediary's books.
There's huge info on this on HMRC's website however this gives a good introduction: https://www.contractorcalculator.co.uk/what_is_ir35.aspx
If you &/or the director have no idea about all of this then you must get advice before putting anything in place.
Thank you Paul and Tommy, the director was employed by the company and now he is going to work for the same company but through his ltd company, he is going to have a salary as a director but wanted to become a self employed to be able to invoice his own company. Thank you for your comments and giving me a clearer picture of this situation.
Hi Anna,
Unfortunately, we are not allowed to advise on accounting related queries, it would be best to speak to your accountant regarding this issue.
Tommy
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