QDOS TLC35 & MVL - Renew or Not?

[malvolio]

A related question... I thought the time limit for routine inquiries into self assessment returns was 12 months after the filing date (e.g. for the 2013-2014 tax year, must be filed by 31 Jan 2015, and the deadline would be 31 Jan 2016), however this: SALF403 - Enquiries into Tax Returns: power to enquire into Tax Returns states the time limit is 12 months after delivery of the return.

Assuming I have interpreted that correctly, is this a change, or is it just that I've been used to filing late January in previous years?!

They assume you deliver the SAR on time. If you don't the clock starts when they do receive it.

And just to be clear, if an enquiry starts it can go back 6 years if they think you've provided wrong information, or any time (although 20 years is the usual limit) if they suspect criminal activity or fraud.

[Crossroads]

A related question... I thought the time limit for routine inquiries into self assessment returns was 12 months after the filing date (e.g. for the 2013-2014 tax year, must be filed by 31 Jan 2015, and the deadline would be 31 Jan 2016), however this: SALF403 - Enquiries into Tax Returns: power to enquire into Tax Returns states the time limit is 12 months after delivery of the return.

Assuming I have interpreted that correctly, is this a change, or is it just that I've been used to filing late January in previous years?!

[Crossroads]

@Martin... As now pointed out, permieland is indeed both mysterious (as in why do people do it) and dark (I'm not enjoying it). The tax I'm paying is scary too!!!

[Maslins]

So it is necessary to keep PCG or QDOS insurance for 7 years then?

Necessary? No.
Good to absolutely minimise risk? Yes.
Would I personally keep them 7 years if I were in that situation? No.

The 7 years is only really relevant for discovery assessments, ie where at a later date HMRC discover something historic that they weren't aware of at the time. I guess HMRC could argue whilst they inevitably knew you had a company (from various tax submissions), that you didn't disclose you were inside IR35, so they were attempting to "discover" that retrospectively. I think that'd be a bit tenuous.

Keeping it for one year following submission of the personal tax return disclosing final distributions might be a good idea though, in case of a normal (ie non discovery) enquiry.

[ChimpMaster]

<snip>
However, the liquidation only deals with closing down the company side of things. Your personal tax situation continues. Therefore any queries over personal tax related things will not be buried when a liquidation is closed.
</snip>

So it is necessary to keep PCG or QDOS insurance for 7 years then?

[tractor]

..

Ah, I have misunderstood what the darkside is

Mysterious, it is!

[Martin at NixonWilliams]

@Martin - My reading of the OP is that they stopped contracting in February, no information about how long they were contracting for before that date.

Ah, I have misunderstood what the darkside is

[Maslins]

If HMRC are going to send nasty letters during the liquidation process, then your company won't be closing anyway until that is fully resolved and so the cover is still necessary.

It does seem to be a concern of clients that putting a company into liquidation will trigger enquiries, on the basis HMRC might consider it their last chance. To date, we (MVL Online) haven't seen any new enquiries raised following a company being put into liquidation, and we've done quite a few in the last couple of years. I'd suggest the majority of our clients are ex contractors.

Having said that, Mal is correct, any HMRC enquiry into the company affairs would need to be resolved before the liquidation could be finalised.

However, the liquidation only deals with closing down the company side of things. Your personal tax situation continues. Therefore any queries over personal tax related things will not be buried when a liquidation is closed.

@Martin - My reading of the OP is that they stopped contracting in February, no information about how long they were contracting for before that date.

[Martin at NixonWilliams]

I think I already know the answer to this, however a quick review of the policy documentation and a search on here hasn't confirmed...

I'm currently going through an MVL having joined the dark side in February.

My TLC35 policy expires next week - is this worth renewing in the event of a nasty letter from HMRC during the liquidation process?

Can I ask why you are going through an MVL?

If you only began contracting in February you would not be eligible for entrepreneurs relief and so I cannot see why an MVL would benefit you. The reason I say this is because unless your earnings exceed £150k, it would be cheaper for you to pay all or most of the remaining funds in the company as a dividend (in which case an MVL would not be required) rather than capital as the marginal rates of tax are lower (0%/25% compared with 18%/28%).

Martin

[malvolio]

I think I already know the answer to this, however a quick review of the policy documentation and a search on here hasn't confirmed...

I'm currently going through an MVL having joined the dark side in February.

My TLC35 policy expires next week - is this worth renewing in the event of a nasty letter from HMRC during the liquidation process?

Think about how an inquiry would work. HMRC can only challenge your annual SAR after the end of the tax year. If they were going to raise an IR35 case (or anything else) for this year, it would kick off next year. Therefore your insurance needs to stay in place until roughly the end of the tax year after you close the company.

If HMRC are going to send nasty letters during the liquidation process, then your company won't be closing anyway until that is fully resolved and so the cover is still necessary.

[Crossroads]

I think I already know the answer to this, however a quick review of the policy documentation and a search on here hasn't confirmed...

I'm currently going through an MVL having joined the dark side in February.

My TLC35 policy expires next week - is this worth renewing in the event of a nasty letter from HMRC during the liquidation process?