Moved abroad, close UkCo now?

[jamesbrown]

Oh, sorry, that wasn't meant to be cryptic. I just mean that it's quite a bit of overhead if you don't plan to use it and there are risks associated with that. For example, you're still at risk of HMRC investigations unrelated to IR35 (or initially unrelated to IR35). You've probably created a PE in your current jurisdiction too, but I guess you're already aware of that.

[zerosum]

For what it's worth, the TAAR rules are untested in even simple cases, let alone cases involving the pursuit of a "same or a similar trade or activity" overseas or even with a new UK company when non-UK tax resident or TNR. This is super complex/uncertain, IMHO.

It depends on your attitude to risk, I suppose. Personally, I would not be going anywhere near the same or a similar trade or activity in any jurisdiction within two years of the last distribution, but I am fairly risk averse.

To some extent, you do reduce risk by closing your company, because it's fairly difficult to transfer an IR35 tax debt to a director under the PAYE regs and similar NICs legislation (MSC is another matter). You would need to have acted fraudulently. Also, it seems to me that keeping your UK company open carries other risks too.

If it were me, I would close the company and either be done with UK contracting or not work through UK agencies, rather directly with UK clients through my overseas company (but I also wouldn't open an overseas company doing the same thing within two years of an MVL). YMMV.

One clarification: I have withdrawn all profits as dividends. So when I close the company it will be without a liquidator.

I am not UK tax resident (haven't set foot in the UK for well over two years, don't own property, minimal ties) and therefore I don't believe I would have been eligible to claim ER/BADR.

Again, to make the discussion more straightforward, let's assume I don't become tax-resident again in the UK within 5y of leaving.

As I understand it, I do not fall foul of TAAR because:
(i) there are no avoidance measures, per se. I moved before 2020 to benefit from the Brexit withdrawal agreement, I am taking dividends normally and being fully taxed on them in my adopted state. The tax is lower, but I didn't write the rules.
(ii) closure of the UK company is primarily being considered because it makes more sense to operate a 'native' company in the adopted country -- lower CT, issues of PE, etc., though it does have the side benefit of drawing a line under IR35 considerations which are more relevant to the time when I was contracting in the UK than a future in which I won't be.

So I basically take the view that reopening a company within 2y would not strictly fall foul of TAAR, but could simply make HMRC take more of an interest.

[jamesbrown]

I see. You made a reference to the TAAR, so I assumed it was a concern. Absent a capital distribution on closure, it isn’t relevant, I agree.

[zerosum]

I see. You made a reference to the TAAR, so I assumed it was a concern. Absent a capital distribution on closure, it isn’t relevant, I agree.

So in this scenario would you see either (a) holding onto the existing UkCo or (b) opening a new one in a few months as any more likely to prompt an investigation? Or much of a muchness...I suppose I'm thinking that while the large dividend is justified on the basis of my new residency, it is something they could flag. My accountant has a theory that HMRC investigations result from a sufficient number of such flags/unusual activity.

[jamesbrown]

So in this scenario would you see either (a) holding onto the existing UkCo or (b) opening a new one in a few months as any more likely to prompt an investigation? Or much of a muchness...I suppose I'm thinking that while the large dividend is justified on the basis of my new residency, it is something they could flag. My accountant has a theory that HMRC investigations result from a sufficient number of such flags/unusual activity.

No one really knows beyond late/erroneous submissions, but it seems logical, and one thing you can be sure about is that closing a company provides an opportunity to review and then opening another one soon after may look odd. In that case, probably best to keep your current one, but I'd really only do this if you must (i.e., you must deal with UK agents in front of UK clients). Personally, I would be looking to close and deal directly with UK clients, but I appreciate that may not be an option for you.