Reply to: MVL and Ltd Company to Umbrella ?

[NickX]

A couple of thoughts from this:
1) based on the above, why not delay liquidating for 6-12 months?
2) if you're concerned about possible upcoming rule changes (and whilst I've not specifically heard any rumours of a change here, it's almost inevitable it'll be stomped on at some point), and you've got a hefty war chest to enjoy following liquidation, why bother working for another 6-12 months?

My overall view is that brolly post liquidating is most likely safe...but with a big war chest and you being on the brink of retirement, to me seems a bit of a risk for a few months extra work?

Thanks again for your reply.

Well, I think you probably are seeing between the lines fairly accurately.

I am concerned about potential changes to the rules. The 10% Entrepreneurs Relief is certainly very attractive and I would be frustrated if I left it too late and this tax advantage was removed.

With regard whether to bother working another 6-12months, the retirement is quite a big step for me, and I was kind of thinking of "winding down" by working some shorter contracts then taking longer breaks. I suppose just trying to make the transition from full time work to retirement a little less final. I also have clients still calling me trying to get me back to help and I genuinely like to help if I can.

Hence the thought of being able to work via an umbrella company is quite attractive.

I appreciate this probably sounds like wanting my cake and eating it too. I have around £300k accrued in the Limited Company so I guess you are right, a few extra months may not make that much odds.

Many Thanks,

Nick

[Maslins]

I wouldn't be planning to do 2 years under the brolly - probably around 6-12 months before retiring.

A couple of thoughts from this:
1) based on the above, why not delay liquidating for 6-12 months?
2) if you're concerned about possible upcoming rule changes (and whilst I've not specifically heard any rumours of a change here, it's almost inevitable it'll be stomped on at some point), and you've got a hefty war chest to enjoy following liquidation, why bother working for another 6-12 months?

My overall view is that brolly post liquidating is most likely safe...but with a big war chest and you being on the brink of retirement, to me seems a bit of a risk for a few months extra work?

[NickX]

You could try ringing Chris Maslin who posted earlier and runs MVLOnline. If anyone knows surely he does. See if he's heard anything. You could try dropping him a PM with the link to this thread and he might update is tomorrow.

Thanks for this, I have messaged Chris now.

[northernladuk]

You could try ringing Chris Maslin who posted earlier and runs MVLOnline. If anyone knows surely he does. See if he's heard anything. You could try dropping him a PM with the link to this thread and he might update is tomorrow.

[NickX]

Ah my apologies. I was still thinking about PS issues and this clearly isn't that.

No problem, thanks for the input anyway.

Hopefully someone can provide an update on closing a Limited Company via MVL then subsequently working through an umbrella company ?

[northernladuk]

Ah my apologies. I was still thinking about PS issues and this clearly isn't that.

[NickX]

Surely there are people outside the regs working under a brolly anyway - probably even claiming expenses too? If it's legit, and there's a couple of hundred k in the business, then an extra e.g. 20-30k tax over the next two years is probably fine. May be better off in a pension though.

Thanks Sean, I think that is similar to my line of thought - the problem with the pension contribution is that there is a limit of £40k per annum I believe.

[NickX]

Thing is what are you going to do after the brolly? You are taking a contract that is still likely to end within two years and then where will you be? Brolly or not you've started in trade less than 2 years after gaining tax advantage from shutting your company surely?

I wouldn't be planning to do 2 years under the brolly - probably around 6-12 months before retiring.

Common sense may prevail and they put you back outside.. then you are screwed.

Can you explain what you mean? Who would be putting me back outside of what exactly?

Why would I be screwed? My concern is around using the Umbrella Company meaning I would no longer qualify for Entrepreneurs Relief.

Thanks for your response.

[SeanT]

It's a long shot hoping you are going to be in a gig under a brolly for 2 years, particularity when the dust hasn't really settled. Common sense may prevail and they put you back outside.. then you are screwed.

Surely there are people outside the regs working under a brolly anyway - probably even claiming expenses too? If it's legit, and there's a couple of hundred k in the business, then an extra e.g. 20-30k tax over the next two years is probably fine. May be better off in a pension though.

[northernladuk]

I am also looking for clarification on this. Are there any updates on the viability of closing a Limited Company via an MVL claiming Entrepreneurs Relief and then working via an Umbrella Company instead ?

Thing is what are you going to do after the brolly? You are taking a contract that is still likely to end within two years and then where will you be? Brolly or not you've started in trade less than 2 years after gaining tax advantage from shutting your company surely?

It's a long shot hoping you are going to be in a gig under a brolly for 2 years, particularity when the dust hasn't really settled. Common sense may prevail and they put you back outside.. then you are screwed.

[NickX]

Also considering doing what the OP was suggesting. Has there been any further comments from HMRC on this?

I am also looking for clarification on this. Are there any updates on the viability of closing a Limited Company via an MVL claiming Entrepreneurs Relief and then working via an Umbrella Company instead ?

[MrContractor85]

Any developments...

Also considering doing what the OP was suggesting. Has there been any further comments from HMRC on this?

[Alan @ BroomeAffinity]

MVL and Ltd Company to Umbrella ?

Wrong thread. Sorry.

[ChimpMaster]

My views up to about a month ago would be that liquidating a Ltd Co to take on a permie/umbrella position would be safe (though be aware with new rules you'd need to wait at least two years before restarting another contracting business, you can't just go umbrella for 3 months then restart).

However, very brief exchange with the guy behind the consultation it seems he believes:
- taking on a permie/umbrella role in similar field WOULD count as doing a similar trade/activity, but
- he suggested you'd probably be fine in that main motivation would NOT be tax.

For me, this was a concern. HMRC could easily change their view on the second point, and being honest it'd be hard for someone in your position to argue that the tax benefits of an MVL were of no relevance to your decision.

I've requested they specifically say those taking on permie roles shouldn't be at risk...but of course whether they listen to little old me is doubtful.

Reality is I don't know any more than the rest of you. The new legislation is still subject to finalisation. I'm sure the person behind it got many responses beyond mine, but I don't know what they were, or whether any notice will be taken.

Unfortunately as with so much tax stuff these days, it's a case of "nobody really knows". Sucks don't it.

It's to HMRC's advantage to leave the rules vague and open to suggestion, because ultimately it means that they can go back in their time machine and retrospectively clarify the law to their benefit. It makes tax and life planning very difficult for the public, but all HRMC care about is that they collect the maximum tax possible (not necessarily the 'right' amount).

As I've said before, I will be going through MVL later this year and then I may well take 2 years off before settling into a local IT job. It'll mean 2 years off work for me and 2 years' less income tax for HMRC, but that appears to be the rule that they want me to follow.

[Maslins]

My views up to about a month ago would be that liquidating a Ltd Co to take on a permie/umbrella position would be safe (though be aware with new rules you'd need to wait at least two years before restarting another contracting business, you can't just go umbrella for 3 months then restart).

However, very brief exchange with the guy behind the consultation it seems he believes:
- taking on a permie/umbrella role in similar field WOULD count as doing a similar trade/activity, but
- he suggested you'd probably be fine in that main motivation would NOT be tax.

For me, this was a concern. HMRC could easily change their view on the second point, and being honest it'd be hard for someone in your position to argue that the tax benefits of an MVL were of no relevance to your decision.

I've requested they specifically say those taking on permie roles shouldn't be at risk...but of course whether they listen to little old me is doubtful.

Reality is I don't know any more than the rest of you. The new legislation is still subject to finalisation. I'm sure the person behind it got many responses beyond mine, but I don't know what they were, or whether any notice will be taken.

Unfortunately as with so much tax stuff these days, it's a case of "nobody really knows". Sucks don't it.