Coming back to contracting after 23 months

[manjack]

After contracting for nearly 2 years (2014-2016), I moved into a local perm job in April 2016. After completion of probation period, I decided to submit 'Application to strike the company off the register' with the help of my accountant in Oct 2016. The company was 'Final Gazette dissolved via voluntary strike-off' in Jan 2017. There was only £6k left in the company (after exhausting £5k dividends) which was distributed 50% each between myself and my spouse as CG.

As my last contract ended in March 2016, there were no invoices raised from my limited company after this date.

Now, I have had a change of circumstances and the situation in the perm job has been going downhill and I have decided to quit (last day in first week of March 2018).

I have managed to bag a contract role - and am looking to start soon.

But, I am not sure if I can start another Limited company with the same SIC code so soon. I was the director of my previous limited company and later on added my spouse as 50% share holder (only dividends, no payroll). I intend to keep the same arrangement this time again (plus maybe add payroll for my spouse).

Also, I was with InTouch last time, would not be going back to them as I found the service poor with mistakes made at multiple times. Am looking for any recommendations on accountants, am inclined towards Maslins or Gorilla as they support freeagent, but an not sure about their service levels especially ability to speak to someone over the phone.

[Neil@Intouch]

The important question here, is whether the distribution, so date of the final accounts was after 6 April 2016 or not? If not, then the new rules that came into effect from 6 April 2016 won't matter, which is the new 'targeted anti-avoidance rules’ around ‘distributions on a winding up’.

I also see that you weren't impressed with the service received by us at Intouch, so would be open to speaking to you to discuss the reasons and seeing if we can resolve this, so you can use our services again if decided.

We do now support FreeAgent & Xero, so if this was of interest, I can discuss this in greater detail with you.

[WordIsBond]

So, if HMRC wants to argue that you went permie for two years, all for the purposes of gaining a tax advantage by treating £6K as capital gains, rather than as dividends, I'd say to them, "Have at it."

The legislation does not simply include a two year rule, it also says the arrangements have to be to gain a tax advantage. To claim you quit contracting and went permie to gain a tax advantage to cash out your massive £6K lump sum would look very, very foolish.

Just go ahead, form your company, and start contracting again. If you managed to somehow lose a case on this, you and your spouse would be liable to pay dividend tax on £3K each. The risk is negligible compared to the benefits of Ltd Co contracting.

[craigy1874]

My understanding of the situation is that the '2 year rule' does not apply to < £25k distributions, only MVL's.

So in your case, you are fine to re-start.

[Maslins]

My understanding of the situation is that the '2 year rule' does not apply to < £25k distributions, only MVL's.

So in your case, you are fine to re-start.

Basically this.

In terms of accountancy firm, we'd be happy to work with you. We do prefer email for the majority of communication, but fine with the occasional phone call to discuss more complex things.