Time for MVL or not and IR35

[coolhandluke]

I spoke to my accountant a month or so back and was advised HMRC have a massive backlog in respect of documents they need to produce for a MVL and you are looking at an eight to nine month process end to end.

[CompoundOverload]

If you wanted to close down your company (and to avoid the phoenix rules) presumably you'd just withdraw all funds from company (via divs) and close down, which is quick and efficient (and costly if >£25k is cash), as opposed to going down the MVL route.

Not too bothered about the additional higher bracket tax with going into the high tax band doing this. I've got a perm role and want to take cash out ASAP as having cash flow issues but don't want to rule out going back to contracting at a later date.

Any suggestions as to the best way of doing this and how long the process takes?

[northernladuk]

Any suggestions as to the best way of doing this and how long the process takes?

Ask your accountant?

[quantum77]

You need to keep your insurances going just in case anything historic crops up. Most accountants will offer a reduced rate for non trading periods

If he took the MVL route, for how long could he get insurance for? Until the MVL is completed finished?

[northernladuk]

If he took the MVL route, for how long could he get insurance for? Until the MVL is completed finished?

No. Insurances are there to cover you if the client wants to make a historic claim, i.e. contractor did something x months ago and it's caused an issue. In the past we've discussed keeping it another full financial year on after the one you are in to be absolutely sure. Just depends on your risk appetite though.

That said I can't remember the exact circumstances of those discussions as the compay won't exist after MVL so no one to sue. Maybe it was just to stop the client piercing the veil and coming after the contractor personally. Either way, a few quid for peace of mind and all that.

[hungry_hog]

"starting outside and going inside"...do you realise how iffy that sounds - I would delete the post/thread

[ladymuck]

"starting outside and going inside"...do you realise how iffy that sounds - I would delete the post/thread

Why? It's a common point of discussion around these parts.

[northernladuk]

"starting outside and going inside"...do you realise how iffy that sounds - I would delete the post/thread

Good to see some of the lesser known sockies getting an outing.

[coolhandluke]

If you wanted to close down your company (and to avoid the phoenix rules) presumably you'd just withdraw all funds from company (via divs) and close down, which is quick and efficient (and costly if >£25k is cash), as opposed to going down the MVL route.

Not too bothered about the additional higher bracket tax with going into the high tax band doing this. I've got a perm role and want to take cash out ASAP as having cash flow issues but don't want to rule out going back to contracting at a later date.

Any suggestions as to the best way of doing this and how long the process takes?

One thing to consider is that your perm salary will be part of your tax calculation when taking the company cash as dividends. I switched from contract to perm in November and have a 8k tax bill just for the relatively small amount of dividends that I had already taken.

[CompoundOverload]

No. Insurances are there to cover you if the client wants to make a historic claim, i.e. contractor did something x months ago and it's caused an issue. In the past we've discussed keeping it another full financial year on after the one you are in to be absolutely sure. Just depends on your risk appetite though.

That said I can't remember the exact circumstances of those discussions as the compay won't exist after MVL so no one to sue. Maybe it was just to stop the client piercing the veil and coming after the contractor personally. Either way, a few quid for peace of mind and all that.

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.