MVL Clarity

[TheFaQQer]

https://www.gov.uk/government/public...-distributions

If you get ER and start up again doing the same job within two years, you can't keep the tax advantage.

[jamesbrown]

Seems entirely reasonable and reduces some (not all) of the ambiguity. Anyone who was repeatedly opening/closing companies with a view to taking a capital distribution (with or without ER) was already on thin ice. Of course, this doesn't impact the closing of a company in the ordinary way (w/ dividend distribution) and clarifies when a capital distribution is automatically not allowed.

[jamesearljones]

https://www.gov.uk/government/public...-distributions

If you get ER and start up again doing the same job within two years, you can't keep the tax advantage.

I don't think it is that black and white.

The third clause regarding shutting down for tax advantage reasons seems wholly subjective.

[MrMarkyMark]

The third clause regarding shutting down for tax advantage reasons seems wholly subjective.

Just like it is now.
I don't see that to be an issue, as you wouldn't be intending to start up again.

Would you

[jamesearljones]

I would abide by the law

Depends a lot by what is meant by:

"within a period of two years after the distribution, S continues to be involved in a similar trade or activity"

If similar trade or activity pertained to say an umbrella company.

[TheCyclingProgrammer]

The third clause regarding shutting down for tax advantage reasons seems wholly subjective.

It does, but it only comes into play if you start the same trade/activity again within two years.

I agree with the above, this is a positive step but my questions would be:

* Who has to prove it was for tax advantage reasons? Where is the burden of proof?
* What counts as the "same trade"? Does it only apply if you start a new Ltd company again, or could it also catch those who start trading but as self-employed (but still doing the same thing)? Could this potentially catch people who continue doing the same thing either as a permie or through an umbrella?

[jamesearljones]

It does, but it only comes into play if you start the same trade/activity again within two years.

I agree with the above, this is a positive step but my questions would be:

* Who has to prove it was for tax advantage reasons? Where is the burden of proof?
* What counts as the "same trade"? Does it only apply if you start a new Ltd company again, or could it also catch those who start trading but as self-employed (but still doing the same thing)? Could this potentially catch people who continue doing the same thing either as a permie or through an umbrella?

Agreed. They seem to definitions that need to be clarified.

[ChimpMaster]

Good points by CP, highlighting again the confusion that HMRC causes with its convoluted plans.

My aim was to wrap up contracting some time in 2016 and then take a couple of months off before moving into a permanent IT job at some point. As far as I am concerned - in my mind - this should still be OK because I will no longer be operating a business and will have retired from that to take up an employed position.

If I am wrong and HMRC constitute this as "continuing in the same trade", then it might well work out better for me to close the company and take a 2 year holiday. Ultimately this could work out better for me (financially, due to HMRC tax changes, and quality time wise to focus on other things) but of course will be worse for HMRC because they'll miss out on PAYE for the 2 years I would have been a permanent employee in a new job at a decent salary.

[moneymoney]

It does, but it only comes into play if you start the same trade/activity again within two years.

I agree with the above, this is a positive step but my questions would be:

* Who has to prove it was for tax advantage reasons? Where is the burden of proof?
* What counts as the "same trade"? Does it only apply if you start a new Ltd company again, or could it also catch those who start trading but as self-employed (but still doing the same thing)? Could this potentially catch people who continue doing the same thing either as a permie or through an umbrella?

has there been any clarity around what happens if you move to another country and then setup a company there in a similar trade/activity within the 2 years? I would have thought that be closing the company to emigrate that it would be considered a valid enough reason....

[Maslins]

For anyone interested, see page 80 of the PDF from volume 1 here.

Perhaps most relevant bit quoted below:

"6. New section 396B(4) sets out condition C: that the person who receives the distribution is, at any time in the two years following the receipt, involved with the carrying on of a trade or activity that is similar to that of the trade or activity carried on by the company wound up (or its subsidiary). For this purpose the individual may carry on the trade directly, through a partnership, through a company in which he or she has at least a 5% interest, or through a person with whom he or she is connected."

So by my reading, a permie job, or indeed umbrella would be safe. Not specifically excluded, but the final sentence which gives a lot of examples doesn't suggest any employed options (assuming you don't own >5% of the employer, or the employer is connected to you).