I have a Ltd company, to carry out subcontract works for various agencies.

[stuartjessup]

I have a Ltd company, to carry out subcontract works for various agencies.
I have one other engineer that works with me and i invoice for his wages through my company to the end user (Agency)
I then take care of his CIS tax, and liability insurance. Etc.
I have recently been told by an agency that I have applied to for contract work that I cannot do this and that my other engineer must either have his own Ltd company or work through an umbrella company for his wages.

Is this correct???

[Skyline D]

No.

Or at least not by law. There's nothing wrong with what you do as far as I can understand what you are explaining.

It may of course just be their policy, and if so then that's up to them.

[milly143]

I believe what you are doing is fine. We use a lot of subcontractors and we take care of all their CIS deductions (although not their insurance). We also use one company who provide labour to us. They invoice us for the labour they have supplied and we pay them less the 20% deduction. I assume they then do the same for their labourers.

[Creditsafe_Ltd]

If the engineer that works for you is an employee of your Limited company for tax purposes then you are fine, as long as you are paying his NI CIS etc then you have nothing to worry about.

It sounds like the agency in question is getting confused about the IR35 legislation that covers disguised employees using Ltd companies as vehicles to dodge tax...