I'm an IT contractor and am about to start a new contract. There are reasons why I'd like to close down my old company & start a new one, the most obvious being to take advantage of the ESC C16 concession.
My accountants say that I cannot do this, as I would not be able to provide assurances to HMRC that would result in me being granted ESC C16, due to the fact that I would intend to continue the same trade under a new company. However, a colleague's accountants are busy doing this for all of their clients mid-contract, claiming that it is only an issue if HMRC explicitly request such an undertaking and they only very rarely do so.
Who is correct? I have seen this described online as "phoenixing", or a "reconstruction" in which the shareholders in the original company retain an interest in the second company ... and is supposedly a highly questionable practice.
Apologies if this has been covered before; I had a look through recent posts but could find nothing.
My accountants say that I cannot do this, as I would not be able to provide assurances to HMRC that would result in me being granted ESC C16, due to the fact that I would intend to continue the same trade under a new company. However, a colleague's accountants are busy doing this for all of their clients mid-contract, claiming that it is only an issue if HMRC explicitly request such an undertaking and they only very rarely do so.
Who is correct? I have seen this described online as "phoenixing", or a "reconstruction" in which the shareholders in the original company retain an interest in the second company ... and is supposedly a highly questionable practice.
Apologies if this has been covered before; I had a look through recent posts but could find nothing.
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