Interesting. On one hand, its good that this is now being clarified rather than having to rely on the somewhat ambiguous rules in the Transactions in Securities legislation. No more guessing games.
The only thing that seems unusual to me is that it appears to restrict the individual from working in the same trade at all (e.g. self-employed) rather than just through a new Ltd. Or is it just me reading it that way?
That aside I don't think its unreasonable to restrict this - it targets those who like to routinely close their company and extract the profits as capital only to carry on again as before. OTOH it brings some clarity to somebody who is legitimately closing their company but who may return to contracting again in the future (after more than 2 years).
If you legitimately close down the company for reasons where the main purpose is NOT to gain a tax advantage, but then find yourself returning to contracting again within 2 years...then what? Where does the burden of proof lie?
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Reply to: Draft legislation regarding MVLs
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Previously on "Draft legislation regarding MVLs"
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You should theoretically be able to work under an umbrella company for 2 years I would have thought.
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Draft legislation regarding MVLs
This has been published, which means if you wind up your limited company and restart in the same line of business within two years, then you cannot take advantage of drawing cash from the business as capital when winding it up.
Corporation Tax, Income Tax and Capital Gains Tax: company distributions
Basically:
Legislation will be introduced in Finance Bill 2016 to amend ITTOIA and implement a new TAAR. The TAAR will treat a distribution from a winding-up as if it were an income distribution for the purpose of section 1000 CTA 2010 where certain conditions are met.
These conditions are:
* an individual (S) who is a shareholder in a close company (C) receives from C a distribution in respect of shares in a winding-up
* within a period of two years after the distribution, S continues to be involved in a similar trade or activity
* the circumstances surrounding the winding-up have the main purpose, or one of the main purposes, of obtaining a tax advantageTags: None
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