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Time for MVL or not and IR35

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    Time for MVL or not and IR35

    Hello,

    I have been offered a new 6 months role with a new client starting outside IR35 in March and then going inside IR 35 via an Umbrella when IR 35 kicks off in April.
    Currently I'm working outside IR35 and my contract is ending end of February.
    I've got more than 150K sitting in the company.
    So I'm just thinking it might be time to MVL the company using the entrepreneur's tax relief of 10% just in case of any bad CGT changes within the new March budget. I was reading that tax could go up from 10% to 20% for MVL.

    The pros:
    Getting out the money and pay only 10% tax before new March 2021 budget
    I already have a new job for 6 months on the table inside so wouldn't need the company anymore

    The cons:
    I cannot use LTD company during the next 2 years but it would be mitigated by that 6 months offer I'm about to take so in fact I couldn't use a LTD company for only 1 year and half.
    The new contract starts outside and then goes inside. I think It should start directly inside to avoid later HMRC investigations on a contract starting outside then going inside. I guess this is something I could negotiate with them.
    Timing is going to be tricky but achievable


    Any thoughts on my strategy? Am I missing something?
    I don't even speak about the day rate cut I take with the new job inside IR35 via Umbrella simply because market is right now not great and I cannot find any jobs Outside with a good rate. So it is what it is.

    Thanks all

    #2
    Sounds like you understand.
    Talk to an MVL specialist and crack on.
    See You Next Tuesday

    Comment


      #3
      There is virtually zero chance you will complete a MVL before the budget date March 3rd.

      I doubt BADR/ER is going to change this budget.

      Comment


        #4
        Originally posted by philgo View Post
        The pros:
        Getting out the money and pay only 10% tax before new March 2021 budget
        I already have a new job for 6 months on the table inside so wouldn't need the company anymore
        Won't happen.
        The cons:
        I cannot use LTD company during the next 2 years but it would be mitigated by that 6 months offer I'm about to take so in fact I couldn't use a LTD company for only 1 year and half.
        The new contract starts outside and then goes inside. I think It should start directly inside to avoid later HMRC investigations on a contract starting outside then going inside. I guess this is something I could negotiate with them.
        Timing is going to be tricky but achievable
        Correct and correct. The inside gig might not be 6 months and even a year and a half on the difference from inside vs outside could be considerable.

        I'd just use a brolly from day one and then just keep the company open to see what happens next.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Originally posted by ChimpMaster View Post
          There is virtually zero chance you will complete a MVL before the budget date March 3rd.

          I doubt BADR/ER is going to change this budget.
          and I reckon that a distribution in specie does not count as the date of the distribution for SATR purposes.
          See You Next Tuesday

          Comment


            #6
            Originally posted by ChimpMaster View Post
            There is virtually zero chance you will complete a MVL before the budget date March 3rd.

            I doubt BADR/ER is going to change this budget.
            I just spoke with MVL Online and indeed the timing is very very tricky!
            I think It could only work if my company stops trading by the end of the week, get my accountant working out the accounts next week and then starts the MVL last week of Feb. But I am working right now on a contract...

            I don't think that they will scrap BADR but they might increase the tax going with it.

            By the way something I do not know. If I MVL when I have already started that new contract inside IR35, does it has an impact on MVL and ER cause I will become a new higher band tax rate payer?

            Comment


              #7
              Originally posted by northernladuk View Post
              Won't happen.

              Correct and correct. The inside gig might not be 6 months and even a year and a half on the difference from inside vs outside could be considerable.

              I'd just use a brolly from day one and then just keep the company open to see what happens next.

              I agree and agree Market might improve and we might see again good contracts outside IR 35 soon. Agree also that if my Inside contract is only 6 months then I could work outside for 1 year and half again and that would make a hug difference...

              Talking about my new contract : is it really an issue to start inside for 4 weeks and then go inside via brolly? I guess if HMRC investigates my LTD they will only do it on the basis of the 4 weeks outside of my new contract and wouldn't look at my previous contracts outside?

              Comment


                #8
                Originally posted by philgo View Post
                I agree and agree Market might improve and we might see again good contracts outside IR 35 soon. Agree also that if my Inside contract is only 6 months then I could work outside for 1 year and half again and that would make a hug difference...

                Talking about my new contract : is it really an issue to start inside for 4 weeks and then go inside via brolly? I guess if HMRC investigates my LTD they will only do it on the basis of the 4 weeks outside of my new contract and wouldn't look at my previous contracts outside?
                If you are willing to close your company down and forgo years of outside work why is one month where you will, at best, be only incurring a small fine if you get caught such an issue?

                It's unlikely you'll get caught but it's the stress of the investigation you want to avoid. The penalty will be paltry next to the stress. But your call. For one month I probably wouldn't be bothering with the LTD but who knows until you are in that situation. Go for it if you are comfortable.
                Last edited by northernladuk; 8 February 2021, 13:57.
                'CUK forum personality of 2011 - Winner - Yes really!!!!

                Comment


                  #9
                  Originally posted by northernladuk View Post
                  If you are willing to close your company down and forgo years of outside work why is one month where you will, at best, be only incurring a small fine if you get caught such an issue?

                  It's unlikely you'll get caught but it's the stress of the investigation you want to avoid. The penalty will be paltry next to the stress. But your call. For one month I probably wouldn't be bothering with the LTD but who knows until you are in that situation. Go for it if you are comfortable.
                  At the end, I don't really care starting the new job directly inside IR35 or starting with LTD 4 weeks and then going via IR35 Umbrella. The later is just how the client initially presented the offer. So was just wondering if it could be an issue. But as you say it would mean only 1 month so the fine would be minor. It's defo a best setup versus someone else having contracting 2 years outside and then forced inside at the same client.

                  Comment


                    #10
                    Originally posted by philgo View Post
                    At the end, I don't really care starting the new job directly inside IR35 or starting with LTD 4 weeks and then going via IR35 Umbrella. The later is just how the client initially presented the offer. So was just wondering if it could be an issue. But as you say it would mean only 1 month so the fine would be minor. It's defo a best setup versus someone else having contracting 2 years outside and then forced inside at the same client.
                    you do know that if they (HMRC) investigate you, they are likely to look at more than just the one contract?

                    How sure are you that you have no issues with the last 6 years?
                    Can you afford, or do have insurance or other cover for, legal fees?
                    See You Next Tuesday

                    Comment

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