MVL query

[DDixon]

Closing VAT..

I've deregistered for VAT (FRS) using the online HMRC portal - how soon after will I receive my final return?

Do I still need to fill in a 'VAT7 Application to cancel your VAT registration'?

EDIT: I've just managed to find on the HMRC site that if deregistering online, I should get my final return in about 3 weeks and don't need to fill in a VAT7.

But a different question.. what happens to my UTR?

[Maslins]

But a different question.. what happens to my UTR?

? Nothing. The UTR relates to corporation tax. Inevitably once the company is shut down, the UTR will be redundant, but it's important until that point.

[Jessica@WhiteFieldTax]

You can get investigated on the back of an SAR for the previous tax year. Therefore regardless of who provides it, you should keep your cover for the tax year you close down and the next one. After that you should be OK.

Notionally its longer than next years SAR; generally a Self Assessment return can be enquired into up to 12 months after its submitted, unless "discovery" applies - a tax term for information coming to light which wasn't made available to HMRC. Alas they have been having a run of luck in courts and tribunals on blurring the boundaries of discovery, which is making it easier for them to operate beyond the 12 months, in which case its potentially liabilities can go back four years without fraud, longer with fraud.

Similar applies to CTSA returns for Corporation Tax

Another factor to think on here is IR35 compliance is triggered in the first instance from employer compliance, i.e. PAYE investigations / checks. Generally the rule of thumb has been these don't occur once the company is closed, however I'm not sure that could be relied on going forward if HMRC upped compliance work; indeed the converse could apply - a well organised HMRC would use company closures as a trigger for a routine PAYE review and gateway to IR35 enquiry work.

That said, at present, the risks after closure tail off quickly, so in most instances insurance into the next year is adequate unless the taxpayer is either especially complex or particularly risk adverse.

[Maslins]

Another factor to think on here is IR35 compliance is triggered in the first instance from employer compliance, i.e. PAYE investigations / checks. Generally the rule of thumb has been these don't occur once the company is closed, however I'm not sure that could be relied on going forward if HMRC upped compliance work; indeed the converse could apply - a well organised HMRC would use company closures as a trigger for a routine PAYE review and gateway to IR35 enquiry work.

That said, at present, the risks after closure tail off quickly, so in most instances insurance into the next year is adequate unless the taxpayer is either especially complex or particularly risk adverse.

The above does seem to be a concern for a few MVLO potential clients, that HMRC might see the liquidation as their last chance to attack the Ltd Co for IR35 so prompt an immediate investigation.

To date, we haven't seen this at all in practice...but of course that's not to say it won't ever happen.

Given how many active contractor companies there are, especially relative to the fairly tiny number of IR35 investigations, I'd be surprised if HMRC started to look into Ltd Cos already closed off. I think they'd need a very good reason to reinstate a company to challenge for something like this.