Budget Budget Budget Budget - Page 2
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Thread: Budget Budget

  1. #11

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    Quote Originally Posted by ahspooner View Post
    This is one of the reasons i've been indecisive about MVL.

    I was going to start the process on Monday, but wanted assurances that the initial distribution would be pre 20/21 tax year (April 6th), therefore a known quantity. The last situation I wanted to be in, was to start the process, hit a blocker then a change come into the budget which I couldnt then course correct.

    I think it's unlikely they'll change it with effect from Aprl 6th, as people could have been going through the MVL process for months before the new tax year, and it wouldn't be fair. But then again, when has life been fair.
    I get your point, it's very much a one way street.

    How did you fare in getting any assurances?

    You'd like to think that any change would be reasonably phased in eg any companies currently in liquidation would be exempt from changes.

    Worst case you hit 20% rather than 10% - its still less costly than HR divis though obviously a lot more tax than a pension or slow extraction.

    And you are not wrong - life isn't fair - felt like telling one of the permies at clientco that this week when they were whinging about contractor pay!
    Last edited by MrC; 16th January 2020 at 17:47.

  2. #12

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    Quote Originally Posted by ahspooner View Post
    This is one of the reasons i've been indecisive about MVL.

    I was going to start the process on Monday, but wanted assurances that the initial distribution would be pre 20/21 tax year (April 6th), therefore a known quantity. The last situation I wanted to be in, was to start the process, hit a blocker then a change come into the budget which I couldnt then course correct.

    I think it's unlikely they'll change it with effect from Aprl 6th, as people could have been going through the MVL process for months before the new tax year, and it wouldn't be fair. But then again, when has life been fair.
    From what I understand it’s still worth trying to get in with the initial distribution within the current tax year. So you get this years 12k tax free allowance. And next years.

  3. #13

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    That's my plan. Accountancy has started proceedings, then im going to take a call when they're done whether to pass it to the liquidator. If the accountants promises of turnaround time aren't met, then the process is reversable at that point. I just wanted to build in plenty of time for the liquidator. I'd rather reverse the process than 1st distribution going into the next tax year without knowing the state of the budget.

    I'm probably overly worrying, but would rather remain in control (relatively at least)

    Quote Originally Posted by MrButton View Post
    From what I understand it’s still worth trying to get in with the initial distribution within the current tax year. So you get this years 12k tax free allowance. And next years.

  4. #14

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    Quote Originally Posted by MrButton View Post
    From what I understand it’s still worth trying to get in with the initial distribution within the current tax year. So you get this years 12k tax free allowance. And next years.
    Hi. I've just spoken to MVL today, just waiting for my last invoice to come in before officially kicking things off. From the quote above you seem to think that you could get 2 lots of 12k tax free capital gains, I assume based on getting 75% of the distribution within a few weeks (this tax year) and then the other 25% within 4-6 months (next tax year)? Is this right? From what I heard today there's a single point in time at which you are deemed to have liquidated the company and so the entire distribution would fall within a single tax year regardless of when you actually receive the money?

    Heathmout

  5. #15

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    Quote Originally Posted by Heathmount View Post
    Hi. I've just spoken to MVL today, just waiting for my last invoice to come in before officially kicking things off. From the quote above you seem to think that you could get 2 lots of 12k tax free capital gains, I assume based on getting 75% of the distribution within a few weeks (this tax year) and then the other 25% within 4-6 months (next tax year)? Is this right? From what I heard today there's a single point in time at which you are deemed to have liquidated the company and so the entire distribution would fall within a single tax year regardless of when you actually receive the money?

    Heathmout
    Nah, you're taxed according to when you receive the distribution, so you could indeed split it across two tax years and get relief in each (assuming whomever does your MVL is willing to factor it like that).

  6. #16

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    Quote Originally Posted by jamesbrown View Post
    Nah, you're taxed according to when you receive the distribution, so you could indeed split it across two tax years and get relief in each (assuming whomever does your MVL is willing to factor it like that).
    Based on posts I’ve seen from Maslin (I think) this is how I understand it too.

  7. #17

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    OK, so following scenario:

    MVL process started and 75% distributed in March 2020
    Budget announcement that entrepreneurs relief to be cancelled from April 6th but still allowed for MVL's in progress.
    Remaining 25% distributed in July 2020

    Are we saying that 75% is applicable for ER and 25% is not?

    Obviously I'll be finding everything out next week from MVL but wondered what people's opinons were on here.

    heathmount

  8. #18

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    I guess it depends on when/if ER is disposed. If it's April 6th then I'm assuming initial distribution will have ER, the second just having capital gains tax applied.

    Quote Originally Posted by Heathmount View Post
    OK, so following scenario:

    MVL process started and 75% distributed in March 2020
    Budget announcement that entrepreneurs relief to be cancelled from April 6th but still allowed for MVL's in progress.
    Remaining 25% distributed in July 2020

    Are we saying that 75% is applicable for ER and 25% is not?

    Obviously I'll be finding everything out next week from MVL but wondered what people's opinons were on here.

    heathmount

  9. #19

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    Quote Originally Posted by Heathmount View Post
    OK, so following scenario:

    MVL process started and 75% distributed in March 2020
    Budget announcement that entrepreneurs relief to be cancelled from April 6th but still allowed for MVL's in progress.
    Remaining 25% distributed in July 2020

    Are we saying that 75% is applicable for ER and 25% is not?

    Obviously I'll be finding everything out next week from MVL but wondered what people's opinons were on here.

    heathmount

    So yes, these are the critical points and no one yet knows what the answer will be. But you can guarantee one thing: HMRC will make all attempts to get their desperate, illogical hands on CGT for the entire distribution. So they will lobby HMT to remove ER for liquidations regardless of what stage they are in, and for the entire distribution.

    We just have to hope that government sees fit to make a logical law, perhaps not even remove ER.

  10. #20

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    Quote Originally Posted by ChimpMaster View Post
    So yes, these are the critical points and no one yet knows what the answer will be. But you can guarantee one thing: HMRC will make all attempts to get their desperate, illogical hands on CGT for the entire distribution. So they will lobby HMT to remove ER for liquidations regardless of what stage they are in, and for the entire distribution.
    Just to be clear you are suggesting that in Heathmounts scenerio above, HMRC would , given their way, not allow ER against the March 20 distribtion even if it were before the law changed?

    If you are then there's a case for trying to get a 100% distribution in this tax year and this is likely to be a much bigger win for most (getting ER on 100%) rather that getting no ER whatsoever but having 2 years CGT.

    Is anyone else thinking its a safer bet to get 100% this tax year with the ER and write off the £1200?

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