Post MVL Options

[Maslins]

I think common sense (and your own conscience) will lead the way on this.

Also the example HMRC give for transactions in securities seems quite a lot more aggressive than an example where someone closes down, takes (say) 6 months out to go travelling, then sets up a new company to start again.

In their example company 2 is already created before company 1 starts the liquidation process. The trade and assets are transferred barring the cash.

With a contractor, realistically what trade and assets are there? "Trade" I would suggest would be previous clients, "assets" is typically a laptop and mobile.

I wouldn't want to put a finger on a certain time frame that makes it ok, but I'd suggest ensuring first client of Newco is different to last client of Oldco, and that you use it as an excuse to buy a new laptop/phone should see you safe. I'd also recommend against doing anything daft like calling NewCo "OldCo 2 Ltd" so they can't argue there's value in the name which has been kept.

...re the OP, my main issue is before closing down Oldco, he's already planning another gig, and I can't imagine there's a good commercial (non tax) reason for putting it through a different company to the existing one.

[TheCyclingProgrammer]

The problem is that the courts may not see it in the same way because intent is very difficult to prove.

The guy that you refer to sounds like the type that the legislation is aimed for - but to be caught at it they could go for somebody that does it once.

As I said before, really can't say until we see a test of this in the courts!

Craig

Worth noting that according to HMRCs guidance, the burden of proof is on the tax payer, not HMRC!

[TheCyclingProgrammer]

With a contractor, realistically what trade and assets are there? "Trade" I would suggest would be previous clients, "assets" is typically a laptop and mobile.

As I mentioned before, surely goodwill and your reputation as a contractor is an asset (if the goodwill and reputation is associated with you personally rather than YourCo)?

[Craig at Nixon Williams]

My opinion on this differs to Maslins, and until there is some case law we will not have a definitive answer: I would suggest that a ‘trade’ doesn’t stop with one client and a new ‘trade’ begin with another client.

In my opinion, your trade lies with you and what you do, not with one particular client. The same trade could therefore be performed over a range of clients and at different times and through different entities. Your reputation is then an intangible asset associated with that trade (you).

Craig

[Maslins]

Lol, hold on, I'm not saying get a new client and you're magically in the clear. I'm saying if you're going to close down one company and start a new one, try to minimise any links between them.

Completely agree that without case law we don't have much to go on, but I'd suggest HMRC would look at a variety of facts to make their argument (similar to IR35 and other grey areas):

They'll likely be comparing the below features between Oldco and Newco, plus inevitably some others I haven't thought of:
- length of break between invoicing
- similarities in branding
- using the same assets
- having the same clients
- having the same suppliers
- type of work being done (tough to change this)
- who's doing the work (tough to change this too)

I don't know exactly what their take on the rules would be, but I'd suggest thinking about the above, and ensuring there's as little link as possible between the two companies. Making sure first client of Newco isn't the same as last client of Oldco is just one thing, but I think it's a relevant one to help show you're not picking up exactly where you left off.