Limited Company Single or Group (FAO EricMC)
Discussion
Sorry eric you are the only accountant i know here
I have a limited company already, But i was considering registering another, But would it be benificial to change the name to be ???? Group Limited and have one registered company with different sections.
For example ????? Homes Part of the Blah Group Limited???
Or to have all seperate
Steve
I have a limited company already, But i was considering registering another, But would it be benificial to change the name to be ???? Group Limited and have one registered company with different sections.
For example ????? Homes Part of the Blah Group Limited???
Or to have all seperate
Steve
JonRB said:
Sorry eric you are the only accountant i know here
I have a limited company already...
You run a limited company and you don't have an accountant?
I did but he was taking the pi55 with with what he was charging. On the look out for a new one.
But managing fine without one at the moment.. (last 6 months actually....) File my own VAT returns do Companies house Docs etc no problem so far.
Done the majority of the work for the accountant anyway. He only done the reconsiliation, payroll and end of year docs for companies house..
Steve
Technically you can run a company without recourse to an accountant - even the formal statutory accounts do not necessarily have to be prepared by any sort of accountant. The only time a fully qualified accountant would be required if would be if the company needs to be formally audited.
Using the term "group" usually implies that you are operating a number of separate limited companies whose share capital is wholly or mainly owned by another limited company rather than individual persons. The main company is called the "holding" copmpany and the other companies are called "subsidiaries". There can be some tax advantages in having a group like this as it is possible in certain circumstances for the loss of one subsidiary to be "surrendered" to the holding company for offset against a profit in one of the other subsidiaries. It is also possible to obtain "group" VAT registration, rather than have separate registration for the individual companies.
The downside of all this is that by operating a group of companies, some of the thresholds which allow small companies to avail of lowesr Corporation Tax rates or reduced disclosures under the Companies Act may be eroded or denied completely. In other words, the paperwork can get more onerous and complicated - and there's no way you could dispense with an accountant if you were operating a formal group.
Hope that's of help.
>> Edited by eric mc on Tuesday 27th January 23:08
Using the term "group" usually implies that you are operating a number of separate limited companies whose share capital is wholly or mainly owned by another limited company rather than individual persons. The main company is called the "holding" copmpany and the other companies are called "subsidiaries". There can be some tax advantages in having a group like this as it is possible in certain circumstances for the loss of one subsidiary to be "surrendered" to the holding company for offset against a profit in one of the other subsidiaries. It is also possible to obtain "group" VAT registration, rather than have separate registration for the individual companies.
The downside of all this is that by operating a group of companies, some of the thresholds which allow small companies to avail of lowesr Corporation Tax rates or reduced disclosures under the Companies Act may be eroded or denied completely. In other words, the paperwork can get more onerous and complicated - and there's no way you could dispense with an accountant if you were operating a formal group.
Hope that's of help.
>> Edited by eric mc on Tuesday 27th January 23:08
There are some changes to the company tax laws coming through this year that may make you want to avoid having more than one company.
From 6 April any transactions between two or more compnaies under common control will cause additional administration in compiling your tax returns. It will be a requirement that you can demonstrate that you have priced these transactions at "arm's length" and that you retain records and evidence to prove this. Though there are exemptions from these regulations for "small and medium sized companies" the technical definition of these is both complex and subject (ultimately) to the whim of the Inalnd Revenue - they can give you notice that the exemption is disapplied. If that happens you have only 90 days to submit amended tax returns.
Due to the general movement of cases before the ECJ it is also likely that several other changes could take place over following years. The ability to surrender tax losses between companies may have to be revoked (M&S case currentlyat the ECJ) and the ability to move assets between companies without tax charge may be withdrawn (following the ECJ case of Langhorst Hohorst).
If there are commercial reasons for having multiple companies then you may have to accept these extra tax admin burdens (if they fall). If you don't need separate companies for commercial protection then you could use more than one trading name for each activity but run them as divisions of one compnay. Then you can offset losses from one division against the profits of another, move assets between the divisions, etc with no worries.
From 6 April any transactions between two or more compnaies under common control will cause additional administration in compiling your tax returns. It will be a requirement that you can demonstrate that you have priced these transactions at "arm's length" and that you retain records and evidence to prove this. Though there are exemptions from these regulations for "small and medium sized companies" the technical definition of these is both complex and subject (ultimately) to the whim of the Inalnd Revenue - they can give you notice that the exemption is disapplied. If that happens you have only 90 days to submit amended tax returns.
Due to the general movement of cases before the ECJ it is also likely that several other changes could take place over following years. The ability to surrender tax losses between companies may have to be revoked (M&S case currentlyat the ECJ) and the ability to move assets between companies without tax charge may be withdrawn (following the ECJ case of Langhorst Hohorst).
If there are commercial reasons for having multiple companies then you may have to accept these extra tax admin burdens (if they fall). If you don't need separate companies for commercial protection then you could use more than one trading name for each activity but run them as divisions of one compnay. Then you can offset losses from one division against the profits of another, move assets between the divisions, etc with no worries.
Eliminator said:
There are some changes to the company tax laws coming through this year that may make you want to avoid having more than one company.
From 6 April any transactions between two or more compnaies under common control will cause additional administration in compiling your tax returns. It will be a requirement that you can demonstrate that you have priced these transactions at "arm's length" and that you retain records and evidence to prove this. Though there are exemptions from these regulations for "small and medium sized companies" the technical definition of these is both complex and subject (ultimately) to the whim of the Inalnd Revenue - they can give you notice that the exemption is disapplied. If that happens you have only 90 days to submit amended tax returns.
Due to the general movement of cases before the ECJ it is also likely that several other changes could take place over following years. The ability to surrender tax losses between companies may have to be revoked (M&S case currentlyat the ECJ) and the ability to move assets between companies without tax charge may be withdrawn (following the ECJ case of Langhorst Hohorst).
If there are commercial reasons for having multiple companies then you may have to accept these extra tax admin burdens (if they fall). If you don't need separate companies for commercial protection then you could use more than one trading name for each activity but run them as divisions of one compnay. Then you can offset losses from one division against the profits of another, move assets between the divisions, etc with no worries.
Eliminator
Basically
i run a project managment company, But to be honest the work automatically goes to my other companies to complete the work. But i also contract in others.
Sounds like i am screwed. But they operate in 3 different sectors but overlap a little in the techonolgy front..
I have to keep thinking about what to do.
Cheers
Steve
Eliminator said:
Check out the conditions for small and medium companies and hope that you fit!
To be honest i sell stuff trade rate from company to company. So does this mean that each company has an unfair advantage.
Also where can i research the new tax regs and possible problems caused by it..
Many Thanks in Advance
Steve
OK, so here is the basics and the rules so that you can check further.
Transfer pricing is about the price at which you trade with a related company. Though there is never one price - a range is more appropriate - if you trade with a related party outside of that range you would increase the profits of one company and depress the profits of the other. Suppose that you owned a UK company subject to 30% tax and a Jersey offshore company subject to 0% tax, you might be tempted to push profit away from UK to Jersey as you would pay less tax and keep more profit. Transfer pricing rules require you to demonstrate who you are connected with, what you tave traded, how you priced those trades and why that method is "arm's length".
Since the introduction of Self Assessment this legislation is contained in Schedule 28AA of the Income and Corporation Tax Act 1988. You can check out the detail of how the Revenue says this works at
www.inlandrevenue.gov.uk/manuals/intmanual/INTM432000.htm
You will note that (subject to some conditions laid out in sub. (3)-(6)) the legislation does not apply to two companies within the charge to UK tax (see para5(2) Schedule 28AA).
Now, so far this makes sense as one would expect the Government to stop people shipping profits out of the UK to avoid tax. However, we are part of the EU and under the Treaty of Rome there are four fundamental freedoms, which include the freedome of establishment (what form you do business) and the free movement of capital. Anything that impedes these freedoms is not lawful, and that includes tax law. Transfer pricing legislation imposes a burden on businesses that would not be present if you set up the company in the UK. This amounts to discrimination on grounds of residency and falls straight into the prohibition on grounds of restricting the fundamental freedoms noted above.
Unfortunately, the Revenue cannot admit that this is the situation, and indeed they do not agree this analysis in public. However, it is correct and they need to remove the discrimination before someone takes them to court, the fantisy disintigrates and they have to repay billions to those who have suffered the cost of complying or suffered adjustments to their tax bills because of the rule.
One can remove discrimination by dropping the rule, or by applying it to everyone so you can guess what comes next. The pre-budget report in December 2003 proposed to extend the rules to all related companies. You can read the details at:
www.inlandrevenue.gov.uk/pbr2003/pn05.htm
And the Revenue published some more "consultation" material at:
www.inlandrevenue.gov.uk/pbr2003/ct-reform.pdf
The rules are not yet in final form so it is difficult to prepare yourself in detail, and it is possible that you may qualify as a "small" of a "medium sized" business and so you might be able to escape the rules completely. Take a look at those definitions and you may be lucky.
If you are going to be caught then you need to be able to answer those 4 questions:
1. Who am I connected to?
2. What did I transact with them?
3. How did I price those transactions?
4. Why is that pricing "arm's length"?
John
Transfer pricing is about the price at which you trade with a related company. Though there is never one price - a range is more appropriate - if you trade with a related party outside of that range you would increase the profits of one company and depress the profits of the other. Suppose that you owned a UK company subject to 30% tax and a Jersey offshore company subject to 0% tax, you might be tempted to push profit away from UK to Jersey as you would pay less tax and keep more profit. Transfer pricing rules require you to demonstrate who you are connected with, what you tave traded, how you priced those trades and why that method is "arm's length".
Since the introduction of Self Assessment this legislation is contained in Schedule 28AA of the Income and Corporation Tax Act 1988. You can check out the detail of how the Revenue says this works at
www.inlandrevenue.gov.uk/manuals/intmanual/INTM432000.htm
You will note that (subject to some conditions laid out in sub. (3)-(6)) the legislation does not apply to two companies within the charge to UK tax (see para5(2) Schedule 28AA).
Now, so far this makes sense as one would expect the Government to stop people shipping profits out of the UK to avoid tax. However, we are part of the EU and under the Treaty of Rome there are four fundamental freedoms, which include the freedome of establishment (what form you do business) and the free movement of capital. Anything that impedes these freedoms is not lawful, and that includes tax law. Transfer pricing legislation imposes a burden on businesses that would not be present if you set up the company in the UK. This amounts to discrimination on grounds of residency and falls straight into the prohibition on grounds of restricting the fundamental freedoms noted above.
Unfortunately, the Revenue cannot admit that this is the situation, and indeed they do not agree this analysis in public. However, it is correct and they need to remove the discrimination before someone takes them to court, the fantisy disintigrates and they have to repay billions to those who have suffered the cost of complying or suffered adjustments to their tax bills because of the rule.
One can remove discrimination by dropping the rule, or by applying it to everyone so you can guess what comes next. The pre-budget report in December 2003 proposed to extend the rules to all related companies. You can read the details at:
www.inlandrevenue.gov.uk/pbr2003/pn05.htm
And the Revenue published some more "consultation" material at:
www.inlandrevenue.gov.uk/pbr2003/ct-reform.pdf
The rules are not yet in final form so it is difficult to prepare yourself in detail, and it is possible that you may qualify as a "small" of a "medium sized" business and so you might be able to escape the rules completely. Take a look at those definitions and you may be lucky.
If you are going to be caught then you need to be able to answer those 4 questions:
1. Who am I connected to?
2. What did I transact with them?
3. How did I price those transactions?
4. Why is that pricing "arm's length"?
John
Thanks for the info, I keep reading, but to be honest i feel that i fall into yet another grey area of the Law..
I run the project managment commpany that pushes work to the other companies that i own.
Project managment company Dishs work out to company one (Sound and Vision) also dishes out work to (Automation company) also Dishes out work to some other contractors (Not linked with me but have a history of working together)
The client then gets Invoices from Managment company, Sound and Vision and Automation plus other contractors.
SO in looking at the text i do not push the profit from one company to the other. In the way that i understand it i do not transfer trade between the companies (no money anyway just business)
God im getting confused with the tax system and laws now....
Thanks for the links
Steve
I run the project managment commpany that pushes work to the other companies that i own.
Project managment company Dishs work out to company one (Sound and Vision) also dishes out work to (Automation company) also Dishes out work to some other contractors (Not linked with me but have a history of working together)
The client then gets Invoices from Managment company, Sound and Vision and Automation plus other contractors.
SO in looking at the text i do not push the profit from one company to the other. In the way that i understand it i do not transfer trade between the companies (no money anyway just business)
God im getting confused with the tax system and laws now....
Thanks for the links
Steve
I have read through in detail the draft proposal, And one company has a trunover of circa 800k others in the region of 100k. But with the projects i have over the next 12 months if the company was as one entity with devisions i will possbible exceed there turnover limit of 2mil Euros. I do not perminantly employ over 10 staff but i have had over 40 contractors working for me on one project. These were subcontractors so hope thats excluded from the Equation.
Thanks
PS nice Subaru have you had the PPP installed??? if so whats the difference
PPS I take it you are a Finance managment consultant of some kind?
Thanks
PS nice Subaru have you had the PPP installed??? if so whats the difference
PPS I take it you are a Finance managment consultant of some kind?
Thanks
Scooby is spot on. It has the PPP engine / exhaust, their low-weight wheels and strut braces front & back.
Engine mods make a big difference to power and it's still very drivable - even when off the turbo. Biggest let down are the Pirelli P Zero Nero tryes fitted as standard - not up to the task. Best results by taking the front pressure up to 41psi. Side walls lack stiffness and too much tread block sees movement and heat. I am going to Tyo Proxes T1S - marked out by the Scooby groups as the best for the STi.
Has been regularly to the track. Front / back wheight balance is not great until I learned to trail the brakes into a corner to load the front, turn in then accelarate in a 4-wheel drift. Frightens the life out of Porsche drivers!
As to job - I am ex-Tax Inspector, now Parner in big 4 firm based London. My specialist subject is International Tax.
May see you around
John
Scooby is spot on. It has the PPP engine / exhaust, their low-weight wheels and strut braces front & back.
Engine mods make a big difference to power and it's still very drivable - even when off the turbo. Biggest let down are the Pirelli P Zero Nero tryes fitted as standard - not up to the task. Best results by taking the front pressure up to 41psi. Side walls lack stiffness and too much tread block sees movement and heat. I am going to Tyo Proxes T1S - marked out by the Scooby groups as the best for the STi.
Has been regularly to the track. Front / back wheight balance is not great until I learned to trail the brakes into a corner to load the front, turn in then accelarate in a 4-wheel drift. Frightens the life out of Porsche drivers!
As to job - I am ex-Tax Inspector, now Parner in big 4 firm based London. My specialist subject is International Tax.
May see you around
John
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