Redundancy from Ltd company - i am the director

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homeowner

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I am taking a new PAYE job, have been contracting in IT for years as a Ltd company. Can I make myself redundant from my Ltd company and pay myself redundancy? Do I have to close my company if I do this or can i leave it not-trading for a number of years?

Any advice appreciated.
 
homeowner said:
I am taking a new PAYE job, have been contracting in IT for years as a Ltd company. Can I make myself redundant from my Ltd company and pay myself redundancy? Do I have to close my company if I do this or can i leave it not-trading for a number of years?

Any advice appreciated.
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not 100% but do not see any reason why you cannot make yourself redundant and pay a lump sum there are limits to how much you can take tax free - once the company ceases trading you can then leave it dormant or liquidate it
 
Thanks bazermc. Do you know if I take redundancy does it impact on me going back to contracting in a few years with my old ltd company (assuming i leave it dormant in the meantime).....ie can i "hire" myself back in a few years after taking redundancy?
 
homeowner said:
I am taking a new PAYE job, have been contracting in IT for years as a Ltd company. Can I make myself redundant from my Ltd company and pay myself redundancy?
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couple of questions for you, Would you be resigning from the company as a director or would the company be removing you as a director. Are you a shareholder of this company. If you did resign would the company be left with at least two directors??


homeowner said:
Do I have to close my company if I do this or can i leave it not-trading for a number of years?

Any advice appreciated.
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You can leave the company non-trading for as long as you like but the company still must file the relevant documenst with the Companies Registration Office (annual return and accounts) and with Revenue.

What might be worth looking into is the "Voluntary Strike Off" process where you can close the company down as long as there is no money owed to any creditors or to revenue. Then you can distribute any money left to the shareholders, which if you are one would then get the money.

If you wish then you could always set up another company in time.
 
RonanC said:
couple of questions for you, Would you be resigning from the company as a director or would the company be removing you as a director. Are you a shareholder of this company. If you did resign would the company be left with at least two directors??
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No, i would not be resigning.

Basically can i take redundancy and still leave the company intact?
 
You can take redundancy, fees, bonus or additional salary from the company but it really doesn't matter what you call it, all such payments will be fully taxable and subject to PAYE/PRSI. This is obviously not a genuine redundancy situation and as such you have no grounds to claim preferential tax treatment on that basis nor can you make a claim from the State Redundancy Fund .
 
I want to disagree with this info (but I hope that I am wrong).
We have just sold a small company and we agreed that the working director would be given a tax free redundancy payment. The accountant says that he has to give it back as you can not make yourself redundant.
There was money in the company to do this and a balancing financial position will be reached so that excess money on the day of handover will be paid back to us so it was not as if the new owner was going to suffer.
It is just that it is seen as what it was. A means of reducing his tax.
 
woods said:
I want to disagree with this info (but I hope that I am wrong).
We have just sold a small company and we agreed that the working director would be given a tax free redundancy payment. The accountant says that he has to give it back as you can not make yourself redundant.
There was money in the company to do this and a balancing financial position will be reached so that excess money on the day of handover will be paid back to us so it was not as if the new owner was going to suffer.
It is just that it is seen as what it was. A means of reducing his tax.
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Are you sure this arrangement will hold water if it is examined and/or challenged by the Revenue? I very much doubt it.
 
RonanC said:
So how would you be taking redundancy and still be employed by the company as a director???
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I dont see how I am "employed" as a director if I am not receiving a salary for the "job". There are two directors, one who doesnt participate and myself. The conpany will not be trading and I will not be drawing any salary from it nor claiming expenses or anything. It will be completely non trading when I "make myself redundant". The only reason I am not winding it up is in case I want to go back to contracting and leave PAYE in the near future.

If it is not allowed to make yourself redundant and pay yourself redundancy, what about winding up a company, are there any provisions for taking a tax free lump sum out of the company?

What is the criteria for being redundant for tax purposes?
 
RonanC said:
So how would you be taking redundancy and still be employed by the company as a director???
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I dont see how I am employed as a director if I am not receiving a salary for the job. The company will not be trading and I will not be drawing any salary from it nor claiming expenses or anything. The only reason I am not winding it up is in case I want to go back to contracting and leave PAYE in the near future.

What is the criteria for being redundant for tax purposes?

If it is not allowed to pay yourself redundancy, what about winding up a company, are there any provisions for taking a tax free lump sum out of the company?
 
ubiquitous said:
This is obviously not a genuine redundancy situation and as such you have no grounds to claim preferential tax treatment on that basis nor can you make a claim from the State Redundancy Fund .
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Why is it not a genuine redundancy? I was working getting a salary and now I will no longer be doing this and I will be working and getting a salary somewhere else.
 
homeowner said:
Why is it not a genuine redundancy? I was working getting a salary and now I will no longer be doing this and I will be working and getting a salary somewhere else.
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Generally when people are made redundant they are not party to the decision to 'let people go', once management has made the decision they might ask if anyone wants to take voluntary redundancy but this doesn't apply in the case you've outlined. It really sounds like you are resigning and moving jobs.

But hey! You might get away with it and if you do good luck.
 
I was contracting in Ireland until 2002. I wound up my company and paid myself a tax-free redundancy sum.

I'm not sure if you can do this if you leave the company dormant. With an annual charge of leaving a company dormant at about €400, I didn't see the point of not winding it down. If I contract again in Ireland, I'll just open a new company.
 
ivorystraws said:
Where does the €400 charge come into play for leaving a non-trading company dormant?
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I think this was introduced around 2002, I can't remember exactly how much, or what exactly it's for..
 
Introduced by who? I know of an IT Contractor that has a non-trading company which is lying dormant and he doesn't pay any such charge.
Is this charge documented somewhere on the CRO site or is the charge even related to the CRO?
 
No such charge is imposed by the CRO except for the normal €40 'paper' filing fee for the annual B1 & accounts filing. If returns are filed late, late fees of €3 per day are charged, and a statutory audit is required even if the company is dormant. The total cost may be well in excess of €400 given all the bureaucracy involved.
 
I think it depends on the PRSI rate you were paying as to whether you are entitled to a redundancy payment.As a director/shareholder you were probably paying the reduced level of PRSI and therefore the company is not allowed to claim back the rebate from the government for you. However you are allowed make a tax free claim on the company for loss of office if you are resigning.
 
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