MVL question...

[sim2kuk]

Closing a company and just opening another, purely for tax purposes....
GAAR.....

Prior to GAAR legislation I’d still say that it smells dodgy... loans from Isle of Man was never illegal, but lots of long time contractors told me it was great... how’s that working out.

You may be absolutely fine. Just doesn’t sit well with my risk appetite and morality.

It's not for tax purposes, it's to remove the likelihood of an investigation.

[Lance]

It's not for tax purposes, it's to remove the likelihood of a tax investigation.

FTFY..

OK. If you say so.
I'm not convinced, but as you say it's legitimate by the letter of the law.
Personally I'd rather have a body evidence to demonstrate my compliance with taxation laws. And some legal representation to make sure I don't misrepresent anything.

I wouldn't fancy relying on the veneer of obscurity. Especially as closing down a company requries HMRC to explicitly grant permission so any potential obscurity is illusory. Buy hey ho. It's your risk.

[sira]

I may MVL my Ltd. next year too. Any recommendations for reliable/trustworthy firms?

[cojak]

I may MVL my Ltd. next year too. Any recommendations for reliable/trustworthy firms?

I used MVLOnline.

I was very happy with them.

[craigy1874]

What makes you think you will get capital treatment via an MVL if you have already or will open another company to continue contracting?

The TAAR will make the distribution taxed as a dividend, so you will have paid an MVL setup fee for no reason!

[sim2kuk]

What makes you think you will get capital treatment via an MVL if you have already or will open another company to continue contracting?

The TAAR will make the distribution taxed as a dividend, so you will have paid an MVL setup fee for no reason!

I expect to pay it as a dividend, I'm not saying any different.

[sim2kuk]

FTFY..

OK. If you say so.
I'm not convinced, but as you say it's legitimate by the letter of the law.
Personally I'd rather have a body evidence to demonstrate my compliance with taxation laws. And some legal representation to make sure I don't misrepresent anything.

I wouldn't fancy relying on the veneer of obscurity. Especially as closing down a company requries HMRC to explicitly grant permission so any potential obscurity is illusory. Buy hey ho. It's your risk.

So personally it's more around the anxiety that it brings, I have QDOS insurance and every one of my contracts has been reviewed and found outside IR35, as are my working practices. I am looking to close it in the normal way an MVL would take place, through paying myself dividends down to the £25k Capital Gains level. I have been told that a future investigation is less likely if there is no company to investigate.

All I'm trying to do on this thread is work out the take home from doing this , and whether my interpretation of the MVL rules is correct.

[Maslins]

I am looking to close it in the normal way an MVL would take place, through paying myself dividends down to the £25k Capital Gains level. I have been told that a future investigation is less likely if there is no company to investigate.

With my understanding of your plan, you wouldn't need an MVL. At least not for tax reasons. Are you thinking an MVL over a strike off is somehow better to close things off formally (totally ignoring possible tax differences)?

A couple of things more generally:
1) some people seem confused re what impact the TAAR ha. If you're caught by it, forget about ER, it's irrelevant. Those funds received will be taxed as dividends, so not even capital gains in the first place. The logic being if you restart again soon after, the trade never really ceased, so any funds taken should be considered as if part of a continuing trade.
2) I have heard the logic of contractor companies closing periodically (regardless of size of bank balance at end) with the primary purpose being to draw a line in the sand from an IR35 perspective. I doubt HMRC are very happy about it, and if challenged it might fall foul of GAAR/whatever. Having said that, HMRC don't really have the resources, so it's probably a fairly effective option.

All I'm trying to do on this thread is work out the take home from doing this , and whether my interpretation of the MVL rules is correct.

Any funds taken in this way will be taxed as dividends. Ie no difference whether taken when it's clearly during a trading period, or whether it's taken at the end of the company's life. Therefore forget about ER/CGT, and just look at what your personal tax bill will be based on that level of dividends.

[sim2kuk]

With my understanding of your plan, you wouldn't need an MVL. At least not for tax reasons. Are you thinking an MVL over a strike off is somehow better to close things off formally (totally ignoring possible tax differences)?

A couple of things more generally:
1) some people seem confused re what impact the TAAR ha. If you're caught by it, forget about ER, it's irrelevant. Those funds received will be taxed as dividends, so not even capital gains in the first place. The logic being if you restart again soon after, the trade never really ceased, so any funds taken should be considered as if part of a continuing trade.
2) I have heard the logic of contractor companies closing periodically (regardless of size of bank balance at end) with the primary purpose being to draw a line in the sand from an IR35 perspective. I doubt HMRC are very happy about it, and if challenged it might fall foul of GAAR/whatever. Having said that, HMRC don't really have the resources, so it's probably a fairly effective option.


Any funds taken in this way will be taxed as dividends. Ie no difference whether taken when it's clearly during a trading period, or whether it's taken at the end of the company's life. Therefore forget about ER/CGT, and just look at what your personal tax bill will be based on that level of dividends.

That's great, thanks Maslins.

[craigy1874]

I expect to pay it as a dividend, I'm not saying any different.

If you expect to pay tax as a dividend, why is the title of your thread 'MVL Question'?

I am now very confused.