entrepreneurs relief and MVL

[cojak]

OP won't be able to do that unless a nice moderator / admin grants PM rights due to their low number of posts.

Admin has been asked.

[administrator]

PM rights sorted!

[a1pepper]

many thanks. much appreciated

[Maslins]

Hello, sorry for slow response, try to avoid working over weekends then Monday morning always chocca.

My view would coincide with that of Iliketax. There are a few 20% tests, see here for our summary. Struggling to find a useful HMRC link since everything moved to .gov.uk pages.

Buying the shares won't have helped your case, even if they were sold at ~break even. It suggests you had investment motives even if they didn't pay off...but based on the 20% tests:
- sounds like <20% of your income derives from investments,
- sounds like <20% of your expenses relate to investments (possibly not if you paid lots of adviser fees when buying/selling the shares)?
- I would guess <20% of your time has been spent dealing with the investments, though possibly not if you spent quite a while debating/choosing the shares and perhaps your consulting income is only part time.
- most likely >20% of the company's assets will be considered investment ones. The shares certainly would. There's a bit of debate over whether holding hefty cash balances counts as an investment asset...some accountants advocate having board minutes to demonstrate you considering buying a company office/similar, hence the reason for building up big cash reserves...I personally would avoid anything fabricated like that.

Re the 20% tests generally, there is no "if you meet 2 of these you're caught", it's very much just to give a flavour. Virtually every MVL Online client would fail the 20% asset test assuming cash in a deposit account is considered investment...but they'd virtually all fly through the others. My view for most is that it'd be low risk, as 3/4 the tests they comfortably pass.

Only you will know regarding time/expenditure relating to the investments...but if those were high, then it could be you pass only 1 of the 4 tests rather than 3 of the 4, at which point your situation looks much less rosey.

Can understand why your accountant's sitting on the fence re this, as with so many tax things these days the rules are grey and woolly and open to interpretation unfortunately. Hope the above is of some help.