Typical warchest amount and MVL Typical warchest amount and MVL - Page 2
Page 2 of 2 FirstFirst 12
Posts 11 to 19 of 19
  1. #11

    Double Godlike!


    Join Date
    Dec 2012
    Posts
    11,412

    Default

    Quote Originally Posted by mogga71 View Post
    Agree with this. I was going to use an MVL but had second thoughts as I can see there being a need for real outside ir35 contracts when the dust settles as we will be in the middle of a sh1tstorm. I do want to close the Company as don't want HMRC investigation. Current gig was 2 years outside and now inside so don't want to take chances ... even with protection. Luckily I have a few years of pension contributions I can utiiise. I plan to take a small dividend in new financial year in order for Company balance to be under £25K and then close it down without need for MVL.
    Hmmmm, seems a bit of a risk there, no?
    I hope you have the money to cover those 2 years should HMRC come a knocking.

    Agency returns make it very easy to pick these up as far as HMRC are concerned, although ultimately it may be an insufficient amount for them to bother with.
    The Chunt of Chunts.

  2. #12

    Still gathering requirements...


    Join Date
    May 2013
    Location
    London
    Posts
    85

    Default

    Quote Originally Posted by MrMarkyMark View Post
    Hmmmm, seems a bit of a risk there, no?
    I hope you have the money to cover those 2 years should HMRC come a knocking.

    Agency returns make it very easy to pick these up as far as HMRC are concerned, although ultimately it may be an insufficient amount for them to bother with.
    Agreed 100% ... hence closing the company. IMHO the best bet in combatting an investigation ... but certainly not guaranteed. Also, the Pension element will be protected from such an investigation.

    It also raises the question .... who are HMRC more likely to investigate next year? .... the switchers who still have their Company open, the switchers who closed their Company with an MVL (practically guaranteed win there in clawing back large tax amounts) or switchers who closed without an MVL (who may have paid more tax than those utilising MVL)?

    Let's be honest .... its a horrible time for everybody...especially contractors. It's all well and good folks criticising the switchers and permie-contractors, but contractors will likely be happy in just having a job in the next 6-12 months. If switchers would have simply left a few weeks back they could quite easily find themselves out of a job of any kind for a very long period of time.

  3. #13

    Still gathering requirements...


    Join Date
    Jan 2020
    Posts
    32

    Default

    Given that I'm currently on the bench. I definitely think a MVL within the next 3-9 months is a likely option for me, assuming I can't find any decent outside IR35 role (very likely in the current market) in that time.

    However I'm not sure what's the best course of action over the coming months in terms of paying myself a salary and potentially applying for furlough support from the Government.

    Should I continue to pay myself the same salary (furlough support or not) until such time as I potentially do a MVL? Appreciate that this might mean I end up paying more tax later in the tax year if i find a new inside IR35 contract or 'normal' PAYE employment after a period of time.

    Is it best to MVL only once I secure a new inside IR35 contract or 'normal' PAYE employment (assuming I can't find any outside contract)?

    In this scenario, I'd probably want to then claim back the company losses from continuing to pay a salary via a CT refund from the previous year before doing MVL?

    Is this kind of scenario likely to complicate my situation and draw unwanted attention from HMRC?

    It's really difficult to weigh everything up and decide how best to proceed, especially with all the unknowns.

    Anyone else in a similar situation and thinking along similar lines?

    Thanks

  4. #14

    Still gathering requirements...


    Join Date
    Jun 2010
    Posts
    44

    Default

    Quote Originally Posted by northernladuk View Post
    I can't think for one minute the amount of money extracted by MVL will even bat HMRC's eyelid. The process will be used by people who just meet the criteria and companies that have millions in the bank. As long as it's done properly I am sure they don't care about the amounts.

    Just think about why you are closing. The problem is you won't be able to open another one for two years. We've already had one guy that's shut it and it didn't work out with his brolly and he wants to open a LTD to go back outside... which he can't. I have a feeling we are going to have a raft of these in the short term with the U Turn and in general for the next 2 years.
    What is preventing you, assuming you plan to open another Ltd, opening a second Ltd. 6 months say before an MVL, and then doing the MVL on the first company? You already have a Ltd. open, but I imagine there is some clause to preventing you starting to trade in the second Ltd?

  5. #15

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    43,555

    Default

    Quote Originally Posted by lecyclist View Post
    What is preventing you, assuming you plan to open another Ltd, opening a second Ltd. 6 months say before an MVL, and then doing the MVL on the first company? You already have a Ltd. open, but I imagine there is some clause to preventing you starting to trade in the second Ltd?
    Must admit I've not seen anything in writing but I would guess it would be covered by carrying on the same role or whatever the wording is. It doesn't stop you opening another company, it stops you carrying on in the same trade.

    Something like that anyway.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  6. #16

    Default

    Quote Originally Posted by lecyclist View Post
    What is preventing you, assuming you plan to open another Ltd, opening a second Ltd. 6 months say before an MVL, and then doing the MVL on the first company? You already have a Ltd. open, but I imagine there is some clause to preventing you starting to trade in the second Ltd?
    The TAAR talks about a trade or activity which is the same as, or similar to, the existing one. It doesn't talk about companies or even whether a company is used (e.g., sole trader). So, no.

  7. #17

    Still gathering requirements...


    Join Date
    Jan 2020
    Posts
    32

    Default

    Spoke to my accountant about the interim options until such time that I definitely do decide to MVL.

    They suggested continuing paying my usual salary to myself into the new company year (from April) probably makes sense as well as possibly taking £2k dividends (up to tax free allowance). That way if I was to find a new outside contract in a few months (still think it's very unlikely) then I could continue as normal for the time being.

    Although I've decided not to go down the coronoviris Job Retention Support route as it doesn't feel morally the right thing to do given my circumstances and money built up in the company. Even though I have a health condition where I've been advised to stay home for the next 3 months, which obviously limits my ability to find a new contract.

    If I don't find any further contract work in next few months then I could claim the corporation tax back on the salary paid in the current company year as it would have resulted in a loss.

    I know it can cause a delay in processing a MVL if you have to wait for a CT refund, but I'm not sure if it is advisable if it might cause any other issues or additional scrutiny when processing the MVL?

    Also am I right in thinking that you need to transfer the business money to the liquidators for a significant period of time (could be months) as part of the MVL process?

    If so, what protection is there if the liquidators themselves end up in financial difficulty given the current state of the economy? Is the money ring fenced in some way to protect businesses engaging a liquidator?

  8. #18

    My post count is Majestic

    northernladuk's Avatar
    Join Date
    Mar 2009
    Posts
    43,555

    Default

    They should yes. It's your money not theirs so they shouldn't be mixing it. Same as solicitors etc.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  9. #19

    Default

    Quote Originally Posted by Scoooby View Post
    Also am I right in thinking that you need to transfer the business money to the liquidators for a significant period of time (could be months) as part of the MVL process?

    If so, what protection is there if the liquidators themselves end up in financial difficulty given the current state of the economy? Is the money ring fenced in some way to protect businesses engaging a liquidator?
    Might want to check with Chris Maslin who's a regular here, but my understanding is that the rules have changed there, so the liquidator may not need to hold the money to mitigate the risk (to them). But, yes, it should be protected either way.

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •