MVL 2yr Rule & TAAR

[steve green]

Can Anyone guide me correctly as my IP cannot ??

MID 2020 I decided enough was enough with operating a stressful construction business especially when COVID crisis kicked in
I decided that construction was no longer for me!!

I signed my declaration of solvency 1st nov 2020 and appointed my IP to carry out an MVL on my contracting company

I received a capital distribution equating to 98% of the capital reserves within the company Jan 2021 form the IP as a transfer in Specie.

I accounted for the capital gained on my tax return claiming business asset disposal relief April 2021 on the total capital

The remaining 2% was retained by the IP as a buffer against any unforeseen creditors etc.
I received CT & MVL clearance & no unforeseen creditors were established

The IP distributed the remaining 2% NOV 2022

Distributions Received
Dec 2020 £98,000
Nov 2022 £2,000

Tax accounted for on the full £100,000 in April 2021


My question is that if I was to take become a shareholder in a new construction company would I fall foul of the TAAR on any or both of the distributions above
Does TAAR rule start from date of solvency declaration??
Or
Does TARR and thus tax implications apply 2 yrs from the each distribution

I have read a lot of different reviews that have touched on similar cases but none the same

I would greatly appreciate any structured feedback

[vetran]

Try the professional forums this one is for taking the mick out of people. Perfect if you want to talk about your penis extension hairdresser car or squirrel perversion not so good for accounting/Legal (oh look a forum that may be useful). By the way its mainly IT contractors but we have a few that are manly and do building but don't upset her!

So do you know how to bleed a radiator or like films about radiators?

[northernladuk]

Distributions Received
Dec 2020 £98,000
Nov 2022 £2,000

Tax accounted for on the full £100,000 in April 2021

My question is that if I was to take become a shareholder in a new construction company would I fall foul of the TAAR on any or both of the distributions above
Does TAAR rule start from date of solvency declaration??
Or
Does TARR and thus tax implications apply 2 yrs from the each distribution

I have read a lot of different reviews that have touched on similar cases but none the same

I would greatly appreciate any structured feedback

It's from your date of distribution. Finance Act 2016

Your initial distribution and your final distribution would be treated separately. If it is the date of distribution, and the legislation seems pretty clear on that, then you would be past the two years from that date for your initial distribution but not yet past it for the final distribution. That being the case, I believe you could start a company now, and your initial distribution would be fine, but the final distribution would come under the two years rule.

For that amount you could just reverse the distribution on the final one and then just get on with it. You are gonna lose a lot more waiting until 2024 than you would not claiming it and start your new work.

On your point first question, you mention becoming a shareholder rather than starting a new company. In my pretty uselss opinion this is a very thinly veiled attempt to achieve the same outcome so TAAR would still apply.

An interesting comment on this page.
https://www.accountancyage.com/2018/...en-winding-up/

Although the TAAR was originally proposed to tackle the tax advantages which can arise from phoenixing (the practice of liquidating a company and then setting up a new company to carry on much the same activities), the scope of the legislation goes well beyond this and has the potential to apply in a much wider range of scenarios.

You being a shareholder but not the owner, for me, would be exactly one of these scenarios it would apply in. You have gained a tax advantage and then gone back to enjoying the same tax advantages allbeit not the owner/director of the company. I'd say thats about as close as it gets and you've done it purely for the advantages tax benefit so cannot see how TAAR cannot apply.

To be honest I'm just guessing here but you are breaking the spirit of the rule with a manufactured scenario to gain a tax advantage so same outcome, just with hooky setup.

[northernladuk]

Try the professional forums this one is for taking the mick out of people. Perfect if you want to talk about your penis extension hairdresser car or squirrel perversion not so good for accounting/Legal (oh look a forum that may be useful). By the way its mainly IT contractors but we have a few that are manly and do building but don't upset her!

So do you know how to bleed a radiator or like films about radiators?

What the stuck-up, half-witted, scruffy-looking nerf herder said.

[jamesbrown]

To begin with, the TAAR isn't about shareholders, it's about carrying on the same or a similar trade or activity. You won't be caught by the TAAR for purchasing shares in the Kier Group

Assuming you plan to carry on the same or a similar trade or activity, it applies to each distribution separately so, based on the facts you've presented, you'd be quite unlucky if HMRC were to investigate and, furthermore, to make a fuss about the second of those two distributions, which is very small anyway. The first is already more than 2 years ago.

Bottom line, you won't find a definitive answer on this, but it should be pretty low risk given those facts and it may not be relevant at all, depending on whether you intend to carry on a trade or activity.

[vetran]

What the stuck-up, half-witted, scruffy-looking nerf herder said.

you sweet talker!

[SueEllen]

Blah blah serious stuff. Blah blah serious stuff

This is General!

Why do you still have hope?

[SueEllen]

you sweet talker!

Who was your favourite Gladiator?

[jamesbrown]

This is General!

Why do you still have hope?

Yeah, sometimes I just can't be arsed, must do better.