Continuing the trade - drilling down

[MrC]

Assuming wind up of ContractorCo and an ER claim...

I'll summarise the range of opinions I've seen on here (lowest --> highest risk):

1. Start NewCo in same trade: 'You might not get caught' --> Total slam dunk
2. Brolly in same field: Moderate risk --> Low risk
3. Fixed term PAYE contract: ?
4. Permie : Zero --> Low risk

Given the spectrum of opinons on each scenerio it seems the risk is somewhat subjective and I want to understand why.

I'm aware this topic pops up here every few weeks, but I wanted to get to the crux of the thinking behind the perceived risks.

I know HMRCs guidance leaves a lot of questions unanswered but surely by now people have been through the mill with this?

Is it because it's all case law and there's no precedent?

Or perhaps because anyone who's lost a court case on this has kept schtum?

[northernladuk]

Not sure why it's subjective. Option 1 total no goer. All the others are fine.

[vwdan]

Anything that doesn't involve you running a Ltd Co is fine.

[MrC]

Not sure why it's subjective. Option 1 total no goer. All the others are fine.

Hmmm, You said here:

IMO you are employed as an Umbrella client so I don't see how they can have a problem with it.

Last time I checked IMO stands for "in my opinion".

Opinions are inherently subjective.

[northernladuk]

Hmmm, You said here:


Last time I checked IMO stands for "in my opinion".

Opinions are inherently subjective.

Fair point but I'm just another contractor as are most of the people on here. Nearly everything we say is an opinion based on our own knowledge research.

[MrC]

Couple of other examples show this isn't universally clean cut:

There's no absolute certainty in this area, but the I think you're at the low-risk end of the spectrum, providing you can evidence what you've said and that you do indeed use an umbrella, which is a form of employment (so not a "trade", and probably not an "activity" as intended by the TAAR). Opening another company would be a higher risk, certainly.

in fact that whole thread shows that people have different views.




another example which shows there's some perceived risk in LTD>Brolly:

Scenario is clear intention to semi retire or retire or equally someone intending to find and stick out perm work, but then it doesn’t work out
In theory this is fine, but that depends on you being able to convince HMRC (or, ultimately, a court) that the liquidation was "genuine", ie not driven by tax considerations alone. This may be easier in some circumstances than others (eg if you took a permie job but were subsequently made redundant etc that would most likely be OK; but quitting after 6 months for no obvious reason would probably not.) Where the line lies precisely? No idea, and will almost certainly depend on the specific circumstances of each case. I wouldn't expect proving this point in your favour to be straightforward in most cases.

[northernladuk]

This is HMRC we are talking about so feck knows what will happen..But you already have the opinions of other people from other threads.

What is your reason for closing it down and going brolly?

What else are you after?

[MrC]

This is HMRC we are talking about so feck knows what will happen..But you already have the opinions of other people from other threads.

What is your reason for closing it down and going brolly?

What else are you after?

How about answers to these 3 questions in the OP for starters:

I know HMRCs guidance leaves a lot of questions unanswered but surely by now people have been through the mill with this?

Is it because it's all case law and there's no precedent?

Or perhaps because anyone who's lost a court case on this has kept schtum?

[Lance]

If you think there’s a realistic proposition of contracting via a LTD at any point in the next two years then don’t take a capital distribution.
That’s it in a nutshell.

ER is immaterial. So is what you do in between.

I’d keep the company going, on reduced accountant fees (most do a deal).
If you want to save the accountancy then close the company but take dividends rather than capital. That way you can start again easily.

[MrC]

If you think there’s a realistic proposition of contracting via a LTD at any point in the next two years then don’t take a capital distribution.
That’s it in a nutshell.

ER is immaterial. So is what you do in between.

I’d keep the company going, on reduced accountant fees (most do a deal).
If you want to save the accountancy then close the company but take dividends rather than capital. That way you can start again easily.

Yes Ltd>Ltd has the broad consensus that it isn't a sensible option. It's the other routes which are more of interest.