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Time for MVL or not and IR35

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    #41
    Originally posted by CompoundOverload View Post

    Historically if an IR35 investigation is raised they can look back 6 years (in some instances longer) therefore, you could argue that keeping IR35 insurance running might be worth it but like you say depends on risk appetite.
    If he closes his company down via MVL or struck off then once it's closed isn't that the end of any potential investigations? If not then there must be a fixed time window that any investigation could occur within otherwise you would need (IR35) insurance forever!

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      #42
      Originally posted by quantum77 View Post

      If he closes his company down via MVL or struck off then once it's closed isn't that the end of any potential investigations? If not then there must be a fixed time window that any investigation could occur within otherwise you would need (IR35) insurance forever!
      correct.
      It would require some evidence of serious evasion/fraud for HMRC to pursue the directors of a LTD that no longer exists.
      See You Next Tuesday

      Comment


        #43
        Originally posted by quantum77 View Post

        If he closes his company down via MVL or struck off then once it's closed isn't that the end of any potential investigations? If not then there must be a fixed time window that any investigation could occur within otherwise you would need (IR35) insurance forever!
        Would it though? The contractor is on the hook for the tax they've paid so if they've received it in dividends HMRC would want to know why. They could still go back and investigate the engagement method even without the company. It's the contractor that's on the hood not the company? Got me all confused overthinking this now and I can't remember the answers we've given in the past.

        PI insurances would be different of course.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

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          #44
          This is something I'm currently trying to decide on. I've been trading for 9yrs but spent a significant amount of that time (7yrs from 2012) with one client in *their* various guises over the years. I haven't worked/traded in this business since finishing my last contract, with a completely different client, in April 2020 (due to Covid) but I had already started another business with a long-time friend/ex-colleague a couple of years ago and we started actually trading in July 2020.

          I don't have much left in the "old" business (about £13k) but it has been suggested to me that if I were to MVL it then it would immediately remove any risk of IR35 investigation over the next 6 years. That has some value to me.

          Given that I'm paying around £200/yr for IR35 insurance, continuing to pay that for the next 6 yrs even if I were to just shut down the "old" company seems to get me awfully close to the £1500-ish cost of going down the MVL route which would allow me to sleep soundly at night knowing I don't have to worry about a knock on the door.

          As I'm already a director in the second business (which does similar work albeit with 3 of us in the company) then although I know I can't create another similar company for 2yrs, I'm fine to continue with the one that already exists/is trading.

          To keep things interesting March is my old company's EOY so ideally I need to decide ASAP to avoid starting another FY in that business.

          Does my thinking sound stupid or sensible?

          Comment


            #45
            Originally posted by Peejay View Post
            This is something I'm currently trying to decide on. I've been trading for 9yrs but spent a significant amount of that time (7yrs from 2012) with one client in *their* various guises over the years. I haven't worked/traded in this business since finishing my last contract, with a completely different client, in April 2020 (due to Covid) but I had already started another business with a long-time friend/ex-colleague a couple of years ago and we started actually trading in July 2020.

            I don't have much left in the "old" business (about £13k) but it has been suggested to me that if I were to MVL it then it would immediately remove any risk of IR35 investigation over the next 6 years. That has some value to me.

            Given that I'm paying around £200/yr for IR35 insurance, continuing to pay that for the next 6 yrs even if I were to just shut down the "old" company seems to get me awfully close to the £1500-ish cost of going down the MVL route which would allow me to sleep soundly at night knowing I don't have to worry about a knock on the door.

            As I'm already a director in the second business (which does similar work albeit with 3 of us in the company) then although I know I can't create another similar company for 2yrs, I'm fine to continue with the one that already exists/is trading.

            To keep things interesting March is my old company's EOY so ideally I need to decide ASAP to avoid starting another FY in that business.

            Does my thinking sound stupid or sensible?
            TAAR says you can't start another company in 2 years after claiming BADR.
            But you can't claim BADR if you are still doing the same work for another company.
            So yes you can do what you want, but without BADR.
            Also, with just £13k, just wind the company yourself. Citizens advice have a guide on doing this. Your accountant can draw up the final set of accounts and you take the cash as dividend.
            See You Next Tuesday

            Comment


              #46
              Originally posted by Lance View Post

              TAAR says you can't start another company in 2 years after claiming BADR.
              But you can't claim BADR if you are still doing the same work for another company.
              So yes you can do what you want, but without BADR.
              Also, with just £13k, just wind the company yourself. Citizens advice have a guide on doing this. Your accountant can draw up the final set of accounts and you take the cash as dividend.
              Thanks for clarifying the "qualification" for BADR. Although winding down is clearly the cheapest route, it doesn't give me the peace of mind that I think an MVL would, and that would be my primary reason for shutting down anyway. If I'm not doing it for MVL then I'd consider making the company dormant as a "backup plan" anyway.

              Comment


                #47
                Originally posted by northernladuk View Post

                Would it though? The contractor is on the hook for the tax they've paid so if they've received it in dividends HMRC would want to know why. They could still go back and investigate the engagement method even without the company. It's the contractor that's on the hood not the company? Got me all confused overthinking this now and I can't remember the answers we've given in the past.

                PI insurances would be different of course.
                I reckon that the chances of being investigated once the Company has been shutdown are pretty damned slim. I have never heard of it happening.

                Much more chance of being investigated if Company is still open and contractor has sheer audacity of still operating outside of IR35.

                I have heard people say that HMRC will look at contractors who have been forced to switch to inside from outside and will target them, saying you must have been inside all the time. However, I just can't see it. The contractors at the Banks were told they simply had to consider themselves inside ... even if they were outside ... or leave. If they left they probably wouldn't find another job so they stayed.

                Personally think contractors who has worked for a Company that has made the 'all inside from outside' decision will likely be safe from retro investigations at same gig... especially if LTD has also been closed.

                Comment


                  #48
                  Originally posted by mogga71 View Post

                  I reckon that the chances of being investigated once the Company has been shutdown are pretty damned slim. I have never heard of it happening.
                  But we've never been in a situation where the LTD was shut down BECAUSE of an inside determination. Completely different world now. If you could guess the real number of IR35 investigations and you were completely wrong would you stop taking you never hearing it happen as a yard stick. Many cases don't get to the public eye. You could be right but because you haven't heard of isn't much of guide.

                  Also remember shutting down isn't an option for many as they may have to MVL which means the can't contract under a LTD for two years etc. Not everyone that has gone inside can or should shut their LTD.

                  Much more chance of being investigated if Company is still open and contractor has sheer audacity of still operating outside of IR35.
                  Maybe but that's a poor example. With outside to inside HMRC has a letter from the client saying sorry my contractor has been inside all along. It's a slam dunk (nearly). Throwing in fraudulent tax practices isn't that helpful. If people are gonna do that then bring it on HMRC.
                  I have heard people say that HMRC will look at contractors who have been forced to switch to inside from outside and will target them, saying you must have been inside all the time. However, I just can't see it. The contractors at the Banks were told they simply had to consider themselves inside ... even if they were outside ... or leave. If they left they probably wouldn't find another job so they stayed.
                  I think you are being far too flippant and are missing details. Bank weren't told to consider themselves inside they've banned the use of PSC's which is wholly different. No determination is made. There is a lot to consider. Ban of PSCs, blanket inside and role based determinations all have different problems and risks. There are plenty of gigs out there that have had a proper determination made and I don't see how you can argue a contractor in that situation has any defence. To lump all these in to one comment you don't think any are worthy of investigation is very misguided.

                  Personally think contractors who has worked for a Company that has made the 'all inside from outside' decision will likely be safe from retro investigations at same gig... especially if LTD has also been closed.
                  Same as before. Not every company is doing this so why do you think they are safe? And that's only one situation out of many

                  Common sense dictates it's free money for HMRC and now here is a massive black hole in the budget. You know, you actually might be right about them being safe in the long run but to be so flippant about the level of risk with a mountain of evidence against it I think is not a safe position. It's as head in the sand approach like many people have had about IR35 all along.

                  Nothing might happen and you can come back in a few years and say I told you so but to be so flippant about it is wrong.
                  Last edited by northernladuk; 4 March 2021, 10:41.
                  'CUK forum personality of 2011 - Winner - Yes really!!!!

                  Comment


                    #49
                    Originally posted by Lance View Post

                    TAAR says you can't start another company in 2 years after claiming BADR.
                    But you can't claim BADR if you are still doing the same work for another company.
                    So yes you can do what you want, but without BADR.
                    Also, with just £13k, just wind the company yourself. Citizens advice have a guide on doing this. Your accountant can draw up the final set of accounts and you take the cash as dividend.
                    This is incorrect. You can start up as many Limited Companies as you want but they cannot be in an identical or very similar business area. The interpretation of that is open. With due diligence it's fine, as long as you aren't contracting in IT within Project Management and then MVL, to then open another company with the intent and act of Project Management or acting as such, whether the job title matches or not, within 2 years.

                    Comment


                      #50
                      Originally posted by mogga71 View Post


                      Much more chance of being investigated if Company is still open and contractor has sheer audacity of still operating outside of IR35.

                      I don't think this is the case. Most people will have shat themselves at the thought of being investigated and have shut their companies down given that there are now limited gigs outside and will have gone perm/umbrella et al. Staying at the same client from an outside position to inside is without a doubt low hanging fruit.

                      Anyone now operating outside and have their companies open are doing so confidentially as they no doubt have an SDS that confirms this, so IMO HMRC will probably swerve those in the first instance as it will be the client on the neck, not the contractor.

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