Is it worth closing down Ltd (and starting a new one) as a protection against HMRC? Is it worth closing down Ltd (and starting a new one) as a protection against HMRC?
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  1. #1

    Nervous Newbie


    Join Date
    Mar 2020
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    Default Is it worth closing down Ltd (and starting a new one) as a protection against HMRC?

    I was lucky enough (so far) to have been assessed outside IR35, so I'm carrying on contracting. But what's worrying me is that I've been with the same client for many years now, and that means greater risk should HMRC come knocking. I do have my insurance from QDos in place, and am reasonably prepared, but just fighting off the inquiry is a stressful and lengthy process.
    So I was thinking of closing down current company (not through MVL, to avoid it being seen as "phoenixing"), and having further contracts through the new Ltd, as a means of resetting the IR35 clock and sealing off all the previous years responsibility. It is unprecedented for HMRC to investigate closed company, afaik.
    The only downside I can think of (apart from admin hassle) is that the very fact of winding down the company may attract unwanted attention from taxman.
    What do you think on this strategy?

  2. #2

    Default

    I think you've basically summed it up yourself.

    In principle, closing down your company and starting a new one affords no protection where due diligence hasn't been applied. In practice, you cite due diligence and I am not aware of any company being reinstated for pursuit of an IR35 debt. OTOH, closing down your company does indeed represent an event that HMRC could use as the basis for further investigation.

    Personally, I'd say you're overthinking it. If your working practices are outside and you've done the due diligence, carry on as normal.

  3. #3

    Default

    Quote Originally Posted by sadprofessor View Post
    I was lucky enough (so far) to have been assessed outside IR35, so I'm carrying on contracting. But what's worrying me is that I've been with the same client for many years now, and that means greater risk should HMRC come knocking. I do have my insurance from QDos in place, and am reasonably prepared, but just fighting off the inquiry is a stressful and lengthy process.
    So I was thinking of closing down current company (not through MVL, to avoid it being seen as "phoenixing"), and having further contracts through the new Ltd, as a means of resetting the IR35 clock and sealing off all the previous years responsibility. It is unprecedented for HMRC to investigate closed company, afaik.
    The only downside I can think of (apart from admin hassle) is that the very fact of winding down the company may attract unwanted attention from taxman.
    What do you think on this strategy?
    Do you have any other clients or is this the only one? Working for them most days as a permie would ?

    How many times have you used substitutes for example ? Or requested a holiday

    Are you considering closing down as a sham IR35 arrangement?


    Sent from my iPhone using Contractor UK Forum

  4. #4

    Nervous Newbie


    Join Date
    Mar 2020
    Posts
    7

    Default

    Quote Originally Posted by GhostofTarbera View Post
    Do you have any other clients or is this the only one? Working for them most days as a permie would ?

    How many times have you used substitutes for example ? Or requested a holiday

    Are you considering closing down as a sham IR35 arrangement?


    Sent from my iPhone using Contractor UK Forum
    I've got my working practices assessed and confirmed to be outside by QDos

    Not sure what you mean by "sham arrangement", sorry?

    I am all clean as far as possible, but the point is - HMRC can twist it the way it likes, we've seen that. I just want to minimize my risks.

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