TAAR Rules - Opening new LTD withing 2 years

**northernladuk** · 20 March 2020, 15:45

We forecasted that we'd start to see plenty of threads like this as people knee jerked in to MVL'ing. Didn't think it would be this quick TBH. @cojak, we called it.

1) As Job B is completely different to Job A but within the same industry. Does this still come under a "similar trade/activity"?

Your job is being an IT consultant. The actual tasks on site are irrelevant. You are still an IT Consultancy company so yes it does.

2) As Company A has not been completely liquidated, is it still possible for me incorporate Company B now?

No. The exact timing doesn't really matter unless you are trying to break the law and stay of the radar.

3) If it is possible to Incorporate Company B, could this potentially scupper my Company A MVL? It might be a flag to HMRC seeing a director close one company and open a new one fairly quickly.

Yes. It just looks like exactly what they are trying to catch. You've met all three of the criteria. One of the links you posted explains all this and even has a section titled. 'So should I be scared?
If you plan to use an MVL to get cash out tax efficiently then immediately restart a new business doing exactly the same thing, then yes! In fact you should be caught under the existing rules.' Not sure why you needed to start the thread to be fair.

As Job B is already determined inside, I plan to tax accordingly via a new LTD company.

Not relevant. It's about forming the company. If this is all you are doing then surely carrying on with the brolly is the best way to go.

I am guessing we will have an argument about the reasons being genuine when closing. The examples given are for retiring, emigrating, doing something different. Going brolly is not a reasonable reason. It shows lack of thought about the future of your career so can only have been done to get the tax advantage.

No way around this. It's a blank and white situation. Pay the taxes on the MVL and open Co B or stay brolly for the rest of the 2 years.

**cheeseflan** · 20 March 2020, 16:01

Hi NL,

Sorry I think I wasnt clear in my initial post. Job B is completely different to Job A, it has a different title and different responsibilities, therefore id like to still pose my initial 3 questions.

"I am guessing we will have an argument about the reasons being genuine when closing. The examples given are for retiring, emigrating, doing something different. Going brolly is not a reasonable reason. It shows lack of thought about the future of your career so can only have been done to get the tax advantage."

With job B being different, does that not fall under "doing something different"?

Regards,

CF

**matzie** · 20 March 2020, 16:03

I've not read the question or the response above in massive detail, but some links that might be useful:

HMRC clarifies anti-phoenixing TAAR guidance | AccountingWEB

These conditions, set out in full at s 396B ITTOIA 2005, are summarised as follows:

Condition A: the individual held at least 5% of the shares in the company immediately before the winding up;
Condition B: The company was a close company at some point during the two years ending with the winding up;
Condition C: The individual continues to carry on, or be involved with, the carrying on of the same trade or a similar trade within two years following the date of the distribution; and
Condition D: It is reasonable to assume that the main purpose, or one of the main purposes, of the winding up was the avoidance or reduction of a charge to income tax.

CTM36340 - Company Taxation Manual - HMRC internal manual - GOV.UK

Subject to the facts of the case, where Condition C is met due to an individual remaining ‘involved with the carrying on of’ a trade as an employee, rather than as an owner, shareholder or partner, and has no involvement in or influence over the direction or decision-making of the entity carrying on the activities, it is less likely that Condition D will be met.

HTH

**northernladuk** · 20 March 2020, 16:03

Originally posted by cheeseflan View Post

Hi NL,

Sorry I think I wasnt clear in my initial post. Job B is completely different to Job A, it has a different title and different responsibilities, therefore id like to still pose my initial 3 questions.

"I am guessing we will have an argument about the reasons being genuine when closing. The examples given are for retiring, emigrating, doing something different. Going brolly is not a reasonable reason. It shows lack of thought about the future of your career so can only have been done to get the tax advantage."

With job B being different, does that not fall under "doing something different"?

Regards,

CF

Different title and responsibilities?. What does this mean. You could be a PM and now you work in PMO. It's still IT consultancy. You can do the first job and second job as it all comes under your main trade.

If you were a PM and now you are a burger flipper for Maccy Ds then we've a case.

Will the SIC code for the company be the same?

**northernladuk** · 20 March 2020, 16:04

Originally posted by matzie View Post

I've not read the question or the response above in massive detail, but some links that might be useful:

Nice links. To be fair the ones he posted answer his question. He just doesn't like the answer.

**WTFH** · 20 March 2020, 16:10

Originally posted by cheeseflan View Post

With job B being different, does that not fall under "doing something different"?

Job B might be completely different in your eyes, but is it in the same broad field as you were doing previously?

e.g. if your previous job was "in IT" and your new job was "Gardener", these are different.

If your previous job was "in IT" and your new job is "in IT", no matter how different you think they may be, they are basically the same.

**WTFH** · 20 March 2020, 16:11

BTW, did you forget your other user ID?

**cheeseflan** · 20 March 2020, 16:12

I think the best way to describe the difference would be Job A was a Sales Rep and Job B is a PM.

I see where your coming from with regards to SIC code. My current SIC code is Other professional, scientific and technical activities (not including environmental consultancy or quantity surveying) n.e.c. (74909) and for the new company the SIC code would be Other human health activities (86900) or Other business support service activities n.e.c. (82990)

Mate id love to carry on under Umbrella but for some bizzare reason the b**tards in HR only want LTD people until IR35 reform next year. ffs lol

**cheeseflan** · 20 March 2020, 16:15

Ok, thanks all for your responses. I see where you are coming from, its the same industry despite being different roles therefore still considered as the same trade/activity.

hopefully the client will accept me under an Umbrella. Thanks for your quick feedbacks!

TAAR Rules - Opening new LTD withing 2 years