Closing your company

[Maslins]

My understanding is that I can't open another ltd company operating in the same primary business area. Or can I? Would I be prevented from doing this by virtue of the fact that HMRC would declare my ER from the wind up of my ltd to be invalid and come looking for repayment plus penalties therefore making it unviable?

Also as I understand it, I would be able to continue operating inside IR35 through a brolly.

You CAN start doing the same thing via a brand new company the very next day. Issue is you'll lose any tax benefits you hope to get by doing the MVL. Ie the liquidation distributions would be taxed on you as dividends, rather than capital gains.

General consensus is a brolly would be fine. Reason being legally there you're an employee, rather than running a business with similar trade/activity.

[Chaytor]

Correct but just a point. You can't open another company in the same area for 2 years. IT Consultancy is such a broad activity though so it will cover pretty much anything IT (we think). Would moving from coder to PM be considered same area? Some argue not but if you have the skills to consult in both areas you'll still be an IT consultant so probably caught. After the 2 years then fill your boots.

Yes a brolly is fine as you aren't just phoenixing to gain a tax advantage if you move from MVL'd LTD to umbrella.

But whatever you do, DO NOT go forward based on the advice from a bunch of contractors. Speak to an MVL specialist and your accountant to get the full picture. It will be a very costly mistake if you don't get it right and you'll be stuck for 2 years so some forward planning is key. We are already getting a steady flow of people who did a knee jerk MVL because they were going inside and they've finally realised inside isn't the end of their contracting career, it's just another gig with a different tax wrapper. They will be losing most, if not all of the tax advantage from the MVL now they are via brolly even on outside gigs for the next 2 years.

Well, yes if you're going to be inside for 2 years with a brolly I can see that but my own plans would be to throw money at my pension for the next 2-5 years until I pack it all in

[Chaytor]

You CAN start doing the same thing via a brand new company the very next day. Issue is you'll lose any tax benefits you hope to get by doing the MVL. Ie the liquidation distributions would be taxed on you as dividends, rather than capital gains.

General consensus is a brolly would be fine. Reason being legally there you're an employee, rather than running a business with similar trade/activity.

and I think I'm right in saying that capital gains don't count towards your personal tax burden for the year?

[Maslins]

and I think I'm right in saying that capital gains don't count towards your personal tax burden for the year?

Well, capital gains tax is a form of personal tax, and normally even with an MVL there would be some personal tax payable. But that tax liability is typically much lower than if you were to get the same amount as dividends. Capital gains aren't income, so a big gain won't be pushing you into higher income tax brackets if that's what you mean.

[Fred Bloggs]

and I think I'm right in saying that capital gains don't count towards your personal tax burden for the year?

Personal allowance is against income. CGT, as the name suggests is for capital and has it's own annual allowance.

[Chaytor]

Well, capital gains tax is a form of personal tax, and normally even with an MVL there would be some personal tax payable. But that tax liability is typically much lower than if you were to get the same amount as dividends. Capital gains aren't income, so a big gain won't be pushing you into higher income tax brackets if that's what you mean.

Yes, exactly that. Thanks

[d000hg]

Just ask your accountant. If you have to ask these basic questions it's good you're getting out as you're clearly not cut out to be a contractor.

FTFY... Is NLUK OK?

[TheCyclingProgrammer]

Regarding VAT, ideally you would deregister before selling the assets to yourself but it depends on their value. If the VAT on the total assets would be above £1k then you will still need to account for the VAT on deregistration but if it’s below £1k then I believe you can deregister for VAT and sell the assets without VAT.