Question submission date: May 2020
Full Question: “I plan to make my Limited Company dormant whilst working through an umbrella company. What company expenses can I claim?”
We have a number of clients that need to work through an umbrella company or agency PAYE for their current contract, yet do not want to close their Limited Company incase future assignments fall outside IR35. So we offer clients our Easy Switch package, where you can do just that. You can read more on this here: Easy Switch. This package provides options for any contractor waiting on further confirmation surrounding IR35.
Originally, the off payroll roll out into the private sector was due to start from April 2020. Due to Covid-19 this has now been moved to April 2021. Currently (2020) the contractor decides their IR35 status, but from April 2021 the responsibility will shift over to the end client/recruiter to determine the contracts status.
Anyway, enough of the history lesson! When you are contracting through an Umbrella Company you can continue to claim minimal company expenses that are ‘wholly and exclusively’ for maintaining the company. Examples of this would be your company phone and accountancy fees – as you will still need to submit your filing requirements to companies house. With your company no longer fully active, expenses used in order to carry out your contract work can not be claimed for. For example travel, car parking costs or lunches. When dormant your company is still live through companies house but not active. So, we advise if there are any expenses you are unsure of to speak to your accountant.