Updated TAAR rules - Members Voluntary Liquidation MVL

[LimitedMan]

Hi,

Coming up for 2 years ago I closed my company using a Members Voluntary Liquidation MVL (using MVL Online who were excellent). The other day saw an email from contractor weekly with updated guidance on MVL and just got round to reading it.

Bit of background, closed my company after 20 years of contracting as working at government department for 10 years as contractor and they were getting rid of contractors and applied for permanent role which I got. Was always concerned about the guidance and whether this was deemed to be carrying on in same way as new permanent job was what I was doing before but was open to interpretation and was too early for anyone to have been through it and investigated. Conclusion drew at time was that as had company 20 years and was going into permanent employment for foreseeable future then although carrying on was not as contractor or other disguised contract arrangement would be okay as not opening and closing companies and actively avoiding tax when taking whole situation into account.


The updated guidance that came out couple of weeks ago :

TAAR for that - Contractor Weekly

Now when I read it worries me a bit, cant see too much difference but has re-awakened worry on the interpretation on the carrying on or involved in statement. Given a while since April 2016 has anyone any more experience on the implementation of rules or if the recent update on the guidance has any effect ?


Many thanks


Ex LimitedMan

[northernladuk]

Personally I don't see a problem here. When they consider 'continuing in the same trade or similar trade' I believe they mean contracting. Opening another limited is a no no as that is just blatent avoidance, Umbrella's are questionable and going perm is fine. You have a valid reason for winding the company up and are not doing it just to avoid tax.

Rather than get tied up in the wording think about why it's being applied. To stop aggressive avoidance. You haven't done that. You've shut up shop and gone permie... and you are two years in as well. As long as you've got one, and even better two full years behind you I wouldn't worry. You haven't aggressively avoided anything and it's arguably long enough ago to not get flagged.

Interesting they've used the term Phoenixing. I thought that term was only when a company winds up avoid any ongoing obligations of the original company i.e. to get out of a handcuff clause or to invalidate guarantees the original company gave. Things like 25 years damp course guarantee. I'd be surprised if any damp course company is older than 5 years old so total sham. Anyway.. The govt guidance actually just talks about insolvency here yet Andy uses the term in relation to TAAR. He knows what he's talking about though so I can't argue

Anyhow.. I'd be more worried about your IR35 status working 10 years in a gov dept and then going perm with them after. If that's not inside I don't know what is but it's a moot point as you are 2 years passed so no chance of it being investigated now.

[Maslins]

I don't think you've got anything to worry about. HMRC have made it fairly clear that going from Ltd Co contracting to a permie role, as long as it's not with a related party (eg some convoluted scheme where for example two siblings liquidate, then restart again working for the other sibling's company) then you're fine.

Presumably you're not anticipating returning to contracting any time very soon? If not, sleep soundly.

...and re phoenixing, in company terms it tends to just mean starting again doing something very similar. Can be the "pre pack" type insolvent liquidations where you try to keep the assets of the company, dump the liabilities with the "old" company, and start again with a clean slate. Can also be the solvent ones things like this TAAR is trying to stop (ie start company A, build up a nice war chest taking only very modest salary/divis, liquidate as CGT rates lower than salary/divi rates, then start company B soon after to continue things).

[LimitedMan]

Thanks for both quick replies, seems like nothing to worry about on the TAAR/MVL line and given coming up for two years can rest easy.... famous last words, thanks again, great forum.