"Phoenixing" issue - sue SJD, or any other solution?

[TheCyclingProgrammer]

Thanks again all - yippee for clear regulation...

Which leaves just one last unanswered Q I think - is it worth approaching HMRC on this, specifying what's happened and "asking for permission"? How would I go about it?

Probably not because currently they are sending out the same form letter and not offering clearance.

[WordIsBond]

@JB, thanks.

Re umbrella, interesting, and I can see both views on this. HMRC have fairly clearly stated that going on to become an employee of another company, even if doing similar work, would not be caught. Legally if you work for an umbrella, then you're an employee of that umbrella company. My view would therefore be that you would be safe from the rules. Having said that, I'm not dismissing the logic that many would say that using an umbrella organisation is still contracting rather than permie employment.

It seems to me, even if there is a risk with an umbrella (and I'm not sure there is), that risk would be far less in the OP's case than it would be if he went to an umbrella immediately after closing his Ltd.

It may be that they will go after a test case of "trade or activity" to try to establish that contracting under an umbrella violates that clause. But they won't choose OP as a test case on that clause, because they could lose to him on the "intent to avoid tax" clause. They'd go after someone where their case is ironclad except for the clause they are testing. If OP goes umbrella, they'd risk setting bad precedents for themselves on two separate clauses in the same case if they challenged him. They'd choose an easier target.

[missinggreenfields]

I know that this is no way to run a business, but....

How would HMRC know that you are working for an umbrella company doing work in the same trade as the company that you used to own works in? Sounds like a lot of investigative work would be required on their part to find that out. I'd be surprised if they have the time, inclination or manpower to do that very often.

I'm not saying that it won't happen, but I would expect the chances to be so low that you might as well buy a lottery ticket to cover the tax bill you'd have to pay

[Tardigrade]

I know that this is no way to run a business, but....

How would HMRC know that you are working for an umbrella company doing work in the same trade as the company that you used to own works in? Sounds like a lot of investigative work would be required on their part to find that out. I'd be surprised if they have the time, inclination or manpower to do that very often.

I'm not saying that it won't happen, but I would expect the chances to be so low that you might as well buy a lottery ticket to cover the tax bill you'd have to pay

From what I've read, I would risk this route if the prospective client (assuming I succeed) wasn't willing to let me go PAYE on their payroll for a FTC. I don't think there is any detriment to me in going FTC over umbrella (other than "control" type issues that I am ok with for the moment).

[ChimpMaster]

I know that this is no way to run a business, but....

How would HMRC know that you are working for an umbrella company doing work in the same trade as the company that you used to own works in? Sounds like a lot of investigative work would be required on their part to find that out. I'd be surprised if they have the time, inclination or manpower to do that very often.

I'm not saying that it won't happen, but I would expect the chances to be so low that you might as well buy a lottery ticket to cover the tax bill you'd have to pay

I would have thought HMRC would be quite happy with the huge increase in tax you'd be paying under an umbrella

[jamesbrown]

From what I've read, I would risk this route if the prospective client (assuming I succeed) wasn't willing to let me go PAYE on their payroll for a FTC. I don't think there is any detriment to me in going FTC over umbrella (other than "control" type issues that I am ok with for the moment).

Indeed, PAYE umbrella = PAYE plus umbrella fees If you're not bothered about contracting, per se, and simply looking for a change of scene, straightforward PAYE is your safest bet IMO. As WiB and others have indicated, you wouldn't be a good test case - even in the high risk scenario where you started another Ltd - as you had no intention of avoiding any taxes, but it's better to be defensive, given what's at stake (I'm assuming, quite a lot).

[Tardigrade]

Indeed, PAYE umbrella = PAYE plus umbrella fees If you're not bothered about contracting, per se, and simply looking for a change of scene, straightforward PAYE is your safest bet IMO. As WiB and others have indicated, you wouldn't be a good test case - even in the high risk scenario where you started another Ltd - as you had no intention of avoiding any taxes, but it's better to be defensive, given what's at stake (I'm assuming, quite a lot).

Not done precise calcs but I think the difference in tax would be c. 50k. Enough that were it called in, I'd be in big trouble had I spent it (ie put it in to a house purchase, which I might).

One "last last" question! All this talk of test cases - I'd thought they'd simply assume the position favourable to them, tell me my tax was wrong and send a bigger bill, and that the burden would then be on me (and a host of others in similar positions) to fight any subjectivity. It would then be the brave soul happy to bear legal costs that took the fight to HMRC, whilst everyone else grumbled and paid up.

Is the suggestion that they'd first take it to court before hitting anyone in this position, and would therefore pick someone else?

I guess if that "other person" lost I'd soon be in the same boat though...

[northernladuk]

Have you factored interest and penalties in that figure?

[Tardigrade]

Have you factored interest and penalties in that figure?

No...and my risk-averseness has just shot up!

[gables]

I'd try and get another permie job for the next couple of years, that is after all why you shut down your Ltd, keep the truth the truth.

Also, it would hopefully bring training opportunities while you assess\watch what happens in the contract market which is potentially undergoing quite a change.