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Moving Inside IR35 (Umbrella) - MVL best way to go for current LTD?

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    Moving Inside IR35 (Umbrella) - MVL best way to go for current LTD?

    I am due to start a new role inside IR35, have been working outside for the past 5 years via LTD and have accrued substantial funds (100k) in the company.
    My accountant has suggested the best route is to go via MVL for the LTD, but having looked online, there are numerous potential pitfalls involved.

    If I go MVL route, would the fact I am still contracting (albeit using Umbrella and on PAYE), and given the amount of cash left in the business, would this raise eyebrows with HMRC in so far as they may challenge the wind-up?

    #2
    Originally posted by ensignia

    Hopefully.

    Why don't you just keep your LTD running, or are you giving up any sort of pretence of being an actual contractor?
    Once again you are talking total codswallop.

    To the OP - to answer you question switched to employed employment is not carrying on the same trade as a consultant - you have become an employee.

    Which leaves the all important question of are you likely to return to the trade of being a outside IR35 computer consultant / business consultant in the next 2 years (i.e. are outside IR35 contracts still available in your skillset or have they all disappeared).

    If contracts still exist - don't MVL your company, if you don't expect to return to outside IR35 contractors you could use one.

    The next all important question is then - do you need the money?

    If not you could use the money in the limited company to life off while throwing as much as possible of your inside IR35 income into your pension pot....

    merely at clientco for the entertainment

    Comment


      #3
      Originally posted by eek View Post
      Which leaves the all important question of are you likely to return to the trade of being a outside IR35 computer consultant / business consultant in the next 2 years (i.e. are outside IR35 contracts still available in your skillset or have they all disappeared).
      This. Needs some careful consideration here. We are already getting a trickle of people who went inside when the reforms hit, MVL'd without thinking and now cannot go outside on their next gig. Could be it's worth it and you stay umbrella for two years but you need to work out what suits you best.

      Get professional help with the numbers though. We are just a bunch of contractors so we don't really know the detail.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Originally posted by eek View Post
        Which leaves the all important question of are you likely to return to the trade of being a outside IR35 computer consultant / business consultant in the next 2 years (i.e. are outside IR35 contracts still available in your skillset or have they all disappeared).
        This.

        If you think there's a good chance this umbrella gig is very temporary (eg 6 months), and you're keen to return to outside IR35 contracting, then I'd recommend you keep your company alive, ticking over in the background.

        If on the other hand you're happy your outside IR35 contracting days are behind you for the foreseeable future, an MVL is likely your most sensible option.

        Comment


          #5
          My understanding differs from others here, based on the understanding of time limit for opening a limited company that works on similar types of projects.

          If you initiate an MVL and then work for 2 years through another method, you must wait 2 years and 1 day until resuming outside IR35 contracts via a new limited company that does a "similar" type of business to the one you MVL'd 2 years previously.

          What isn't clear is if this period of 2 years 1 day is from the initiation of the MVL or completion of the MVL. Given you will be working quickly via an agency or umbrella as your employer, I understand the current information is it's 2 years from the initiation of the MVL of the limited company.

          If your projects tend to be around 1 year and you are willing to work on 2 projects for the next 2 years on inside IR35 terms, then MVL seems a good way forward. If you hop from project to project every 3 to 6 months and seem to have outside IR35 options in your work area, then it's worth keeping the limited company open.
          Last edited by agentzero; 22 June 2022, 16:40.

          Comment


            #6
            Originally posted by agentzero View Post
            My understanding differs from others here, based on the understanding of time limit for opening a limited company that works on similar types of projects.

            If you initiate an MVL and then work for 2 years through another method, you must wait 2 years and 1 day until resuming outside IR35 contracts via a new limited company that does a "similar" type of business to the one you MVL'd 2 years previously.

            What isn't clear is if this period of 2 years 1 day is from the initiation of the MVL or completion of the MVL. Given you will be working quickly via an agency or umbrella as your employer, I understand the current information is it's 2 years from the initiation of the MVL of the limited company.

            If your projects tend to be around 1 year and you are willing to work on 2 projects for the next 2 years on inside IR35 terms, then MVL seems a good way forward. If you hop from project to project every 3 to 6 months and seem to have outside IR35 options in your work area, then it's worth keeping the limited company open.
            The TAAR is with respect to capital distributions, so it counts forward from the date each distribution was received. In other words, if you want to avoid any risk, then it's two years from the date the last distribution was received.

            Comment


              #7
              Originally posted by ensignia

              So, basically the same thing I said then? Cool.
              not really you didn’t mention the downsides attached to MVLing your company - which was the OP’s question.

              I covered that first then highlighted other options and the factors that my influence the decision
              merely at clientco for the entertainment

              Comment


                #8
                Originally posted by eek View Post

                Once again you are talking total codswallop.
                Codswalloper's posts removed and codswalloper banned.

                Down with racism. Long live miscegenation!

                Comment


                  #9
                  I got a role outside initially then inside and closed my company.
                  Funds of the same order as yours.
                  MVL was quick and easy, got the money after a few weeks, cost a bit under £2k.
                  Took over a year to close it because of HMRC.

                  Consideration include -
                  How many roles in your area are outside?
                  Is your current role likely to be long term?
                  Do you want to close down any chance of tax investigation into your company?
                  Can you stash money in a pension to mitigate the loss of tax efficiency with an umbrella company?

                  If you put the max yearly allowance, or more, into your pension you can 'take home' over 70% of the day rate.

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