Post MVL opportunity - too risky?

[Craig@Clarity]

I just want to point out again while we are quoting HMRC manuals that the TIS manuals still don't appear to have been updated for the most recent legislation.

Notably, the get out clause of "for commercial reasons" has been replaced by a clause that states the anti avoidance rules will not apply if tax avoidance was not the main motivation for the original liquidation and it's up to HMRC to prove otherwise.

Agreed. Don't rely on HMRC's interpretation and "guidance" in cases like these. If in doubt always refer to the law as this is what counts at Tribunal etc, which has time and time again been demonstrated in case law. I know TCP is clued up on legislation too.

If you want to refer to the get out clause re: this thread, go to ITA2007 Section 685. (http://www.legislation.gov.uk/ukpga/...t/13/chapter/1)

It would be very harsh for the OP to be 'taken' on the basis that they had no need to use the company as they went permie and therefore had no requirement for the company to exist anymore and has even gone down the route of liquidation.

With an independent job opportunity, which hasn't yet materialise, it would be harsh to retrospectively apply tax avoidance in this specific set of circumstances if you look at the timeline of events. If the OP is genuine in all their details, there is no way to show that there was ever an "intention" for tax avoidance. Yes, there may be an income tax advantage by liquidating but this should be covered by ITA2007 S685.

MHO still stands that the the OP should not be "unduly worried" under these set of circumstances. Unless anyone is actually acting and advising the OP on a professional engaged level, you have to take the facts on face value and give general guidance on it.

On another point from other posts, ESC C16 introduced in 1985 has long been superceded and replaced by legislation which caps the distribution to £25k. So where the total reserves exceed this cap, the shareholder would have presumably sought professional advice at the time that would have lead to the MVL taking place and a capital distribution made.

Now, me thinks it's Starbucks time (other coffee outlets are available)!

[Craig@Clarity]

The only accountant that has taken your side is Craig at In Touch- the guy who seems to think laying off the coffee is the answer to a HMRC investigation! Seriously? Really?

Even the tax man likes coffee! No?

[northernladuk]

Even the tax man likes coffee! No?

Just on that point. Who you making tea for now that the scary one has gone?

[Craig@Clarity]

Just on that point. Who you making tea for now that the scary one has gone?

Never mind that, when you going to get the round in?

[northernladuk]

Never mind that, when you going to get the round in?

[ContrataxLtd]

If you want to refer to the get out clause re: this thread, go to ITA2007 Section 685. (http://www.legislation.gov.uk/ukpga/...t/13/chapter/1)

Hi Craig@InTouch

I'm not even sure the legislation there has been updated to take into account the new rules.

As I understood it, FA 2010 basically repealed and replaced the TIS rules to allow for a full rewrite. The link you provided still has the old get out clause mentioned which includes the commercial purposes and is at s685.

Now as I understand it the get out clause can be found at s684(1) (but I can't actually find the updated legislation on the internet at the moment) and it basically states that the transaction is caught if the main purpose, or one of the main purposes, of the person in being party the transaction is to obtain an income tax advantage and the person does actually obtain an advantage.

The burden of proof to be on HMRC to prove this which backs up the points TCP had made previously.

Martin
Contratax Ltd