Post MVL opportunity - too risky?

[Crossroads]

I don't believe there is any definitive guidance on this subject, and a quick search didn't through anything up new so I'd appreciate views on my situation.

- My business stopped trading in February after one of my clients made me an offer to go permanent.
- The offer was good, so I took it, and therefore had no reason to continue running my business.
- An MVL was the sensible option given the retained profit in the company
- Liquidator appointed, funds have been distributed to the shareholders, company shows as 'In Liquidation' at Companies House, hasn't been struck off yet.

Some 6 months or so later, and rather out of the blue, I have been approached for a contract role via an old contact who recommended me for the project. The client is "new" - my old company did not do business with them, nor does my current employer.

If I were to be able to negotiate a suitable contract (that's another story!), and assuming I do all the sensible things like not having a similar company name, not selling my old company assets to the new company and so on, is "Transactions in Securities" an issue that I need be unduly worried about?

[Craig@Clarity]

Simply set up a new company and put the contract through that. Buy all new assets etc, keep it clean and you have no issues as far as I can see.

[Maslins]

Simply set up a new company and put the contract through that. Buy all new assets etc, keep it clean and you have no issues as far as I can see.

I'd agree with Craig. Like you say at the beginning, nobody's 100% certain on any of this (but as a contractor you'll be used to tax rules being like that!). However, given the situation you describe it'd seem extremely difficult for HMRC to argue you were continuing the same trade IMHO.

[Craig at Nixon Williams]

Simply set up a new company and put the contract through that. Buy all new assets etc, keep it clean and you have no issues as far as I can see.

I don’t know how you can say that with any certainty, given that the legislation has never been tested by HMRC. Whilst Transactions in Securities remains untested by HMRC, it is risk to be considered and the OP is correct to ask the question.

If HMRC did look into this then you may have a stronger case if you had different assets and different client than simply returning to the same contract with the same assets – however there is no certainty over this whilst it is untested.

What you need to bear in mind is that you are returning to the same trade undertaken by the company previously and that is where HMRC could make their case. Whilst the old company may not have had physical assets, your name/reputation/skillset in that market is an asset that has been transferred from the old company to the new one and is also the reason that you have won the new contract.

However, you seem to have a genuine reason for closing the original company in that it was not motivated by tax, and that would be favourable in the event of a tribunal.

What you would need to demonstrate to HMRC is that you have not carried on in the same trade, and as above there is different ways that you (or they) could argue this.

[Craig@Clarity]

I think that since the MVL route was taken, there is no issue with starting up again. Chris will be able to confirm with his expertise.

[Craig at Nixon Williams]

I think that since the MVL route was taken, there is no issue with starting up again. Chris will be able to confirm with his expertise.

The transactions in securities legislation is about preventing a tax advantage from being gained, if the OP paid less tax as a result of this then there is still a risk - just because the company has been liquidated doesn't mean that HMRC will forget that a tax advantage was obtained!

[Craig@Clarity]

Yes but he didn't! He closed it for genuine commercial reasons.

[Craig at Nixon Williams]

Yes but he didn't! He closed it for genuine commercial reasons.

He liquidated the company instead of taking the distribution as dividends and therefore gained a tax advantage - he is therefore inside the scope of TIS.

Are you suggesting that because he has done this innocently that HMRC cannot challenge him?

[Craig@Clarity]

No, I'm saying be realistic. He hasn't got a issue so don't worry about it!

[Craig at Nixon Williams]

No, I'm saying be realistic. He hasn't got a issue so don't worry about it!

As per my first post, you can't say that with any certainty. I am surprised about your relaxed view on this.

The OP should know all the risks, however small, before making a decision.