MVL - entrepreneurs relief and starting new LTD Company

[luxCon]

Apologies if this has already been covered on an earlier thread, but circumstances are slightly different.

I am currently in the process of MVL, pre distribution, however the liquidation has started and registered.
This was forced upon me as the current contract forced me in to an Inside IR35, thus leaving the LTD company sitting doing nothing as I am on a PAYE through umbrella.

However I am being offered an Outside IR35 role, way after the liquidation was started. I am now concerned that if I was to take the new role, and thus needing to setup a new LTD I may go against the MVL ER.


Will I be able to still claim the ER on the distributions, as I was forced in to Inside IR35 and a PAYE umbrella , and due to circumstances changing I am now in a position to take an Outside IR35 role.

I appreciate thoughts and guidance.

[jamesbrown]

Not a chance, you would lose the capital treatment, unless the new trade was completely different to the old one (read: not in IT, assuming you're in IT).

There are edge cases whereby you took a permie role for, say, a year, and then went back to contracting and that might be OK in terms of the TAAR, but your scenario is precisely why the TAAR exists

[jamesbrown]

Incidentally, no one "forced" you to do anything. You weren't "forced" to take a capital distribution, you simply decided that you wanted to pay minimal tax.

[GhostofTarbera]

Call the police on whoever forced you into this


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[Paralytic]

Call the police on whoever forced you into this


Sent from my iPhone using Contractor UK Forum

At least he didn't say "illegally forced".

OP, as others have said, this was your choice - you could have kept your Ltd company open whilst working on the inside gig, but decided to do otherwise.

[cojak]

Your bed is the continued use of your umbrella.

[eek]

Your bed is the continued use of your umbrella.

And in the very early days we weren't even sure if going via an umbrella company would be good enough to pass TAAR. Now we have that concern now - but you will still need to use an umbrella company for a good while before getting another limited company (going permanent and it failing to work out is an easier argument then switching to an umbrella company and then returning to a limited company again.

[luxCon]

Incidentally, no one "forced" you to do anything. You weren't "forced" to take a capital distribution, you simply decided that you wanted to pay minimal tax.

Ok, When I say forced I mean it was the option between going PAYE or not having any income. The client turned the contract in to inside overnight, take it or leave it.


What if say my wife setup the new LTD company? Noting that she is a minority shareholder in the old one and benefiting from distribution.

[Paralytic]

What if say my wife setup the new LTD company? Noting that she is a minority shareholder in the old one and benefiting from distribution.

No chance - HMRC "look through" such scam arrangements and would easily see that you're a controlling entity in the new Ltd. This one is as transparent as it gets.

[luxCon]

No chance - HMRC "look through" such scam arrangements and would easily see that you're a controlling entity in the new Ltd. This one is as transparent as it gets.

I do not control my own wind in the house. HMRC can see that my wife is in total control of my life and everything I'm allowed to do.