Reply to: Close and open Limited Company same day

[NotAllThere]

I think this discussion has turned into "how can I get away with aggressively avoiding tax?".

Locked.

[MrMarkyMark]

What will I lose if that happens? I would anyway pay dividend tax now if I go by the rules but may save some if HMRC do not come behind me. The only loss I see is MVL fee. Is there anything I am missing in terms of what HMRC may ask me to pay? Are there any penalties involved?

You are now discussing risk.
What is your feeling should I gamble my whole life savings on the 2:30 at Plumpton, today?
Do you think I'll win?

Penalties, HMRC, yes bloody likely

[NoviceContractor]

Was in a similar situation as you, with greater company reserves, hence, I took as many dividends as the accountant advised this tax year.
You could, also, if inclined, chuck a lump sum into your pension.

You will never get liquidated, to complete, in 2-3 days - sorry!

As far as closing down today and starting tomorrow, I do know plenty that have successfully, as of now, done so, over the years.
I believe when the regulations change, they, HMRC, will then switch the spotlight on to this activity.
A good place to start, IMO, will be the companies that did this straight after the regulation change was announced.
Thars gold in thar hills (for HMRC)

What will I lose if that happens? I would anyway pay dividend tax now if I go by the rules but may save some if HMRC do not come behind me. The only loss I see is MVL fee. Is there anything I am missing in terms of what HMRC may ask me to pay? Are there any penalties involved?

[MrMarkyMark]

Was in a similar situation as you, with greater company reserves, hence, I took as many dividends as the accountant advised this tax year.
You could, also, if inclined, chuck a lump sum into your pension.

You will never get liquidated, to complete, in 2-3 days - sorry!

As far as closing down today and starting tomorrow, I do know plenty that have successfully, as of now, done so, over the years.
I believe when the regulations change, they, HMRC, will then switch the spotlight on to this activity.
A good place to start, IMO, will be the companies that did this straight after the regulation change was announced.
Thars gold in thar hills (for HMRC)

[Maslins]

As alluded to by Alan@BroomeAffinity, I wouldn't rely on tax advice from a liquidator. They're not trained in tax, and don't need to be. They do liquidations, and are trained in all the complications that can arise re that, dealing with debtors/creditors, legal implications re fraud/negligence, etc etc. However, many probably have caught wind that there are some tax benefits to MVLs at the moment and want to jump on the bandwagon.

I imagine they'll all have a big caveat in their engagement letter that they provide no guarantee of any tax treatment, that's for you/your accountant to worry about.

As others have suggested, sounds like what you're planning is a prime example of what should be caught by the "Transactions in securities" legislation...whether that be the existing stuff, or that proposed in the consultation document you link to. Oversimplifying a little, the main change is clearing up a timescale for what will be considered the difference between one trade ceasing and a new one starting vs someone just having a holiday before recommencing the same trade, as 2 years.

You can liquidate, and as stek says you may well "get away with it"...but I think if HMRC were to look into it, you'd find any distributions you'd claimed as CGT,, they'd reclassify as dividends.

Also, fascinated that the liquidator can liquidate your company in 2-3 days?! I'm guessing you misunderstood...perhaps they said they can get your company into liquidation in 2-3 days, which is not the same as them completing the liquidation in that timescale.

[northernladuk]

All the decision you are putting forward have no business reasoning and are purely for avoiding tax. This would fall under aggressive avoidance which means it's likely to fall flat when investigated.

[stek]

What if I go to Umbrella right after closure and stick to it for few weeks/ months and then get back to limited company? I can also take a permi job in between (may be for a day or week just to mark my name there and if HMRC comes after me then I can say that my intention was to go permi and I tried but the role did not turn out to be suitable to me so I had to come back to contracting) and then set up limited company.
Will this cause any trouble?

Yes, I asked a similar question not long back. Basically you are running a big risk if you do you what propose, unless you are retiring or moving abroad perm seems there'll always be the chance Hector will come knocking in the future and he might be able to do that in the EU.

Your argument above is weak, but at the end of the day it's hard to prove intent. The major issue for me is I don't want the Sword of Domacles hanging over my head and the way HMRC is now and will in the future, there are no hiding places, they will look for you, they will find you, and they will penalise you with interest and punative penalties.....

Good luck...

[NoviceContractor]

What if I go to Umbrella right after closure and stick to it for few weeks/ months and then get back to limited company? I can also take a permi job in between (may be for a day or week just to mark my name there and if HMRC comes after me then I can say that my intention was to go permi and I tried but the role did not turn out to be suitable to me so I had to come back to contracting) and then set up limited company.
Will this cause any trouble?

[Scruff]

What did the Seagull say when he flew into a cliff?

[jamesbrown]

Ignore the bloke offering you a quick (allegedly) MVL, what does your accountant/IFA suggest?

Amen, and bear in mind that, once the liquidation process has begun and the liquidator has the funds, those funds are no longer in your control. A reputable company will insure against this risk (e.g. that the liquidator runs with the money), but you don't want to be trusting 200k with some used-car salesman. Someone making such promises won't give a **** about your self-assessment tax return, which is where you ultimately claim ER. Once they have their fee, it's job done.

[DallasDad]

I wanted to try my luck.

200K at risk and you say that!
Methinks you need to sit down and rethink your appetite for risk!

Ignore the bloke offering you a quick (allegedly) MVL, what does your accountant/IFA suggest?

[jamesbrown]

I wanted to try my luck.

At what? Let's assume the rules weren't changing. What's your commercial motivation? Why would anyone believe that you had no expectation to continue in the same trade? You've stated yourself that you have every expectation to do just that. I think you're confused about what is changing in April. Under the circumstances you've described, you would not be eligible for a capital distribution and ER right now because you don't have a commercial reason, and this will be obvious from your actions. If you intended to take permanent employment, you could mount a reasonable argument for tax being a secondary factor (although none of this is well tested), but this is unlikely to be an option from April (unless the new legislation specifically excludes employment as an "activity" or you intend to completely change career).

I don't know how on earth your liquidator can make such crazy promises if they haven't started the process. I guess it's theoretically possible to achieve within weeks, but days? It could take several weeks just to get all the initial admin sorted, depending on how quickly your bank(s) respond. At the very least, the final disbursement will fall under the new regime, because this requires HMRC clearance, and that takes several months. IMO, you'd also be painting a red flag on your back in engaging in this process now.

Anyway, I'm sure some of our friendly MvL experts will be along shortly to outline the steps involved and time taken, but you don't have a commercial motivation to begin with (read: a plausible argument to show why it was commercially motivated, because I accept that many liquidations are not).

[Alan @ BroomeAffinity]

http://forums.contractoruk.com/showthread.php?t=112695

Doesn't matter what your pals are doing / have done. Get expert advice. It's worth noting that you won't necessarily get this advice from a liquidator. This tax advice.

[NoviceContractor]

So you've been giving divis both of you and still managed to save 50k a year? That's good going. It would be a shame to throw away a good chunk of it try to do something you can't.
I'd speak to a professional first if I was messing around with over 200k of my money.

I spoke to liquidator and he said that he can easily get it done in 2-3 days...certainly not few months.
Many of my friends are currently doing this and some previous colleague done this many times earlier.

I am new to MVL and with legislation changing now, I wanted to try my luck.

[northernladuk]

So you've been giving divis both of you and still managed to save 50k a year? That's good going. It would be a shame to throw away a good chunk of it try to do something you can't.
I'd speak to a professional first if I was messing around with over 200k of my money.