MVL and ER - Substantial Cash in the company

[awll25]

Hi all,

Appreciate everyone's view: Here's my situation.

My UK visa is unexpectedly coming to an end, therefore I have to leave the country in a couple of months. At that point, I will not be a resident of UK (but I assume I will still be a tax-resident).

Since I have to leave the UK, I am looking to close down my company of xx years. However, I have a substantial amount of surplus cash, about xxx. Out of this, xxx invested in stock market (passive investment) for less than a year, with xxx unrealised profit but will be liquidating it on Monday (in hindsight I shouldn't have done any non trading activity with the company funds). Everything else is cash, generated and accumulated over the years from the main trading activity of the company. For what it's worth, the bulk of the cash actually started accumulating the fastest in the last years when I secured higher rate contracts.

My fear is if I use MVL and apply for ER, I might be accused of "Moneyboxing" due to the cash buildup. I only paid myself the minimal salary and dividend over the years (and no contribution to pension). The funds have been simply left in the company with the view that these will be managed in a better way at a later date.

What does everyone think?

Can I not argue I have left the funds in there because I had plans to expand the business in the future, and I didn't anticipate I had to stop so abruptly?

I have read Chris Maslin's blog "Changes to tax on MVLs overstated" (good blog) and also read some of his responses on forums, it comes across to me that if I do not start or engage in similar trade or activity within the next 2 years then it should be fine.

Also, I'm not sure what can be done with the fact that I'll be a non-resident post March. Any other options possible with non-resident status? Can I leave the company open and take the funds out over time? How long is a company allowed to be open without any trading activity?

[Lance]

Are you for real?????


Talk to a specialist FFS. You can afford it.
MVL Online is the starting point. Ring them tomorrow.
Stop wasting your time on here getting unqualified opinions.

If you want an unqualifed opinion PM me and I'll setup an offshore account you can transfer it all to with no tax at all to pay. Yes. That's right. You will pay no tax at all.

[jamesbrown]

Money boxing is not a thing that determines whether you’re eligible for a capital distribution or ER. It’s a term used by gov’t for something that they don’t like. But your investments certainly complicate matters w/r to whether it’s a trading company and that does matter, as you allude to.

[jamesbrown]

On the non-residence stuff, that depends entirely on where you’re going, what tax regime they have, and whether you’re likely to become UK resident again within a 5 year period. That definitely needs specialist advice (to state the bleeding obvious).

[awll25]

Are you for real?????


Talk to a specialist FFS. You can afford it.
MVL Online is the starting point. Ring them tomorrow.
Stop wasting your time on here getting unqualified opinions.

If you want an unqualifed opinion PM me and I'll setup an offshore account you can transfer it all to with no tax at all to pay. Yes. That's right. You will pay no tax at all.

I have dropped an email to MVLonline, after seeing Chris Maslin on here on a few threads.

[awll25]

Money boxing is not a thing that determines whether you’re eligible for a capital distribution or ER. It’s a term used by gov’t for something that they don’t like. But your investments certainly complicate matters w/r to whether it’s a trading company and that does matter, as you allude to.

Yes in hindsight it’s actually a very stupid thing to do. But it’s passive and the income it generated is very small compared to the actual trading income.

Is there pre clearance for MVL (not ER)?

[jamesbrown]

Yes in hindsight it’s actually a very stupid thing to do. But it’s passive and the income it generated is very small compared to the actual trading income.

Is there pre clearance for MVL (not ER)?

Unless it breaches the limits for capital or income, you’re probably alright. It’s probably still a trading company and not a CIHC, but you’ll need to talk to a specialist about that.

Yes, I think there is a process where you can ask for guidance, but not a ruling. I can’t see how they could give you a ruling because they can’t know whether the facts are as stated. So I think it’s going to be your call, ultimately.

[awll25]

Unless it breaches the limits for capital or income, you’re probably alright. It’s probably still a trading company and not a CIHC, but you’ll need to talk to a specialist about that.

Yes, I think there is a process where you can ask for guidance, but not a ruling. I can’t see how they could give you a ruling because they can’t know whether the facts are as stated. So I think it’s going to be your call, ultimately.

Thanks. Yeh I’m not sure what to do really. Informal guidance might help, but also read somewhere that it might also be detrimental as it would make the case looks like it’s borderline.

I’m not even sure which professional I should seek. Like I said I have contacted mvlonline. I’ve also spoken to price bailey and WTT. WTT legal said they will come back and see if there’s any precedence on Monday.

Probably have to pay 38.1% dividend tax on the lot.

[jamesbrown]

Thanks. Yeh I’m not sure what to do really. Informal guidance might help, but also read somewhere that it might also be detrimental as it would make the case looks like it’s borderline.

I’m not even sure which professional I should seek. Like I said I have contacted mvlonline. I’ve also spoken to price bailey and WTT. WTT legal said they will come back and see if there’s any precedence on Monday.

Probably have to pay 38.1% dividend tax on the lot.

Chris Maslin is a regular contributor here and MVL Online gets good reviews. I’m sure he can provide some guidance, but it’s ultimately your call and they will deal with the practical aspects rather than detailed tax advice. FWIW, I doubt you will have an issue based on the few things you have posted here. Certainly, the amount shouldn’t be a problem.

[Paralytic]

Probably have to pay 38.1% dividend tax on the lot.

Do you have an active UK pension you could put (up to) £160K into? You'd obviously then have to see how that might transfer abroad with you too, but it could reduce some of the tax bill.