Divorce after 12 years contracting Divorce after 12 years contracting
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  1. #1

    Nervous Newbie


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    Default Divorce after 12 years contracting

    I have been contracting for 12 years and am going through an amicable divorce (her choice). Brexit and Off-payroll rules will possibly mean the end to contracting for me and as we were also married for exactly the same time period and my ex was a shareholder, she couldn't have timed it better in financial terms - such is life. We have agreed to split what is left in the company 50:50.
    However, I'm quite apprehensive that after the divorce and asset split has gone through, hmrc will come knocking and find any one of my contracts inside ir35. Over the last 6 years I have had 2 gigs of 2-year lengths and if it came down to an investigation my fear is that I would be stung for all the back tax, interest etc. In the meantime, my ex, who was not a director only shareholder, will presumably will not share any of the risk and will be able to walk away and sleep easy.

    So my question is can I voluntarily declare to hmrc now that either 1 or both contracts were inside ir35 and pay the respective taxes? Obviously it will leave a much smaller pool of money to divide between us but at least the burden will be shared between us rather than me potentially taking it all on.

  2. #2

    Respect my authoritah!

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    Why do you think those contracts are in IR35? The fact that they were two years long doesn't do it, in and of itself. Have you had the contracts reviewed?
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  3. #3

    I Am Legend


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    Quote Originally Posted by flapping View Post
    I have been contracting for 12 years and am going through an amicable divorce (her choice).

    We have agreed to split what is left in the company 50:50.

    So my question is can I voluntarily declare to hmrc now that either 1 or both contracts were inside ir35 and pay the respective taxes? Obviously it will leave a much smaller pool of money to divide between us but at least the burden will be shared between us rather than me potentially taking it all on.
    Have you asked her what she thinks of your plan?

    There is an old saying. You never know anyone until you divorce them.

    You should just invkoe the IR35 insurance you have got if it comes to it.

    Give her 50% and feel very very lucky.....

  4. #4

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    If you're closing your company, and HMRC doesn't object to the striking off, then there is no company to pay an IR35 debt. That debt would only transfer to the directors in the case if deliberate negligence or fraud. Dissolve the company and stop worrying.

  5. #5

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    thank you for the responses. Closing the company and worrying less, seems like a more agreeable route to take.

  6. #6

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    Quote Originally Posted by mudskipper View Post
    If you're closing your company, and HMRC doesn't object to the striking off, then there is no company to pay an IR35 debt. That debt would only transfer to the directors in the case if deliberate negligence or fraud. Dissolve the company and stop worrying.
    Doesn't this depend on how much money is in the company and how it will be extracted? He might fall over by not being able to open a new one within 2 years if MVL and ER are involved.
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  7. #7

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    Quote Originally Posted by northernladuk View Post
    Doesn't this depend on how much money is in the company and how it will be extracted? He might fall over by not being able to open a new one within 2 years if MVL and ER are involved.
    Agreed. If OP wishes to continue contacting, he will have to close existing company without using MVL and ER,

  8. #8

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    Bite her hand off for 50%, settle before her new fancy man or friends tell her she can easily get 80% and leave you living in a puddle


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  9. #9

    Still gathering requirements...


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    Quote Originally Posted by northernladuk View Post
    Doesn't this depend on how much money is in the company and how it will be extracted? He might fall over by not being able to open a new one within 2 years if MVL and ER are involved.
    I would have thought that regardless of not being able to open a new company for 2 years - dissolving the company and decreasing the complexity of the settlement with the ex would be the correct way to go?

    As we've no further information about whether there are children involved - if there aren't then a clean break divorce splitting what's left after an MVL (and either going perm or working through a brolly for 2 years) would, IMHO, be a sensible way to ensure that the divorce remains amicable and allow OP to move on in an equitable way..

  10. #10

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    Quote Originally Posted by fidot View Post
    Agreed. If OP wishes to continue contacting, he will have to close existing company without using MVL and ER,
    Open to debate, but I'd have thought changing shareholding due to divorce would be considered a pretty good non-tax reason for closing Oldco and opening Newco. Ie I reckon a decent chance they could get beneficial tax treatment even if he starts doing a similar thing soon after as sole shareholder.

    No guarantees...but possibly worth a clearance application? I had thought HMRC had advised they wouldn't offer these, but we've defo had at least one MVLO client confident HMRC had approved their situation (came up mainly as there was confusion over the clearance we apply for vs what they already had).

    Only relevant if the OP has fairly hefty reserves. If all funds are consistently cleaned out with pensions/divis then this may be irrelevant.

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