Reply to: Did I miss something on Entrepreneurs Relief?

[Lance]

However lots can change in future budgets, and I'm a little surprised that Number 11 hasn't looked at ER more closely again.

They almost certainly have.

Somewhere between being 'open for business' and 'we need more money as we can't cut anything further' there's a line.
I think that ER is just too close to the former.

[Dan@OrangeGenie]

I suppose I'm just wondering whether or not the relief was originally intended to benefit people in cases such as mine (where I'll be packing up shop to leave UK)?

I've read some people believe HMRC will soon crack down on ER in future, not sure what they are basing their concerns upon, and whether these are centred around changes to anti-pheonixing rules, or more broadly to one person ltd co's in general?

I think you'll be fine. I work closely with MVL's and you've lined this relief up nicely.

[TheFaQQer]

Does this sound like an open and shut case, or am I one of the ones in HMRC's sights for future changes to wind up relief?

Under the current legislation and guidance, given the limited information here, I would think that you would be OK to close down and claim ER.

However lots can change in future budgets, and I'm a little surprised that Number 11 hasn't looked at ER more closely again.

[northernladuk]

I suppose I'm just wondering whether or not the relief was originally intended to benefit people in cases such as mine (where I'll be packing up shop to leave UK)?

I've read some people believe HMRC will soon crack down on ER in future, not sure what they are basing their concerns upon, and whether these are centred around changes to anti-pheonixing rules, or more broadly to one person ltd co's in general?

Who knows?

[Tinfed]

The changes are in the future so how would we know what HMRC have planned...

I suppose I'm just wondering whether or not the relief was originally intended to benefit people in cases such as mine (where I'll be packing up shop to leave UK)?

I've read some people believe HMRC will soon crack down on ER in future, not sure what they are basing their concerns upon, and whether these are centred around changes to anti-pheonixing rules, or more broadly to one person ltd co's in general?

[SueEllen]

The changes are in the future so how would we know what HMRC have planned...

We have crystal balls.

[eek]

Hi all,

I’m a one man-contractor ltd co. trying to understand my future ability to apply MVL, obtain entrepreneurs relief, and extract profits from my company at 10% CGT in about two years time.

Reason for wind up: leaving UK & going home, hence not planning on starting up any new companies within 2 years.

In two years time I'm expecting(hoping) to have ~£100k in retained cash upon wind up.

Does this sound like an open and shut case, or am I one of the ones in HMRC's sights for future changes to wind up relief?

The changes are in the future so how would we know what HMRC have planned...

[Tinfed]

Hi all,

I’m a one man-contractor ltd co. trying to understand my future ability to apply MVL, obtain entrepreneurs relief, and extract profits from my company at 10% CGT in about two years time.

Reason for wind up: leaving UK & going home, hence not planning on starting up any new companies within 2 years.

In two years time I'm expecting(hoping) to have ~£100k in retained cash upon wind up.

Does this sound like an open and shut case, or am I one of the ones in HMRC's sights for future changes to wind up relief?

[NickX]

Just to keep repeating what has been said several times on here...the new two year rule does not relate directly to a claim for ER, but whether you can treat the extracted profit as *capital*.

Thanks for the response. Very good point as the penalities of the extracted profit being taxed as dividends would be even more costly than simply not getting the Entrepeneurs Relief.

Because the MVL \ ER appears to be a very tax efficient way of extracting the funds I am now thinking its probably best not to do anything that could jeopardise this.

[NickX]

Read elsewhere on here that HMRC currently don't view being employed in same arena as previously contracted through Ltd is a rejection for ER.

So looks possible to me but make sure you research fully before going down that route, then let us know how it worked out.

Thanks for the reply, I am still weighing this up, but at the moment I am thinking that continuing contracting through an umbrella isn't worth the risk of losing the benefit of the Entrepeneur's Relief so may just settle for retiring straight away.

I will keep the forum posted though.

[TheCyclingProgrammer]

Hi there, I am interested in this. Do we know if closing down via the MVL route then using an umbrella company in place of the limited company can be done without jeopardising the Entrepreneurs Relief ?

Read elsewhere on here that HMRC currently don't view being employed in same arena as previously contracted through Ltd is a rejection for ER.

Just to keep repeating what has been said several times on here...the new two year rule does not relate directly to a claim for ER, but whether you can treat the extracted profit as *capital*.

Capital treatment can still be favourable even without ER vs income treatment as you have a separate CGT allowance and the rates are lower than higher rate dividend tax.

[Hobosapien]

Hi there, I am interested in this. Do we know if closing down via the MVL route then using an umbrella company in place of the limited company can be done without jeopardising the Entrepreneurs Relief ?

Read elsewhere on here that HMRC currently don't view being employed in same arena as previously contracted through Ltd is a rejection for ER.

So looks possible to me but make sure you research fully before going down that route, then let us know how it worked out.

[NickX]

Close down and claim ER while you still can, and use a brolly until quitting the game if that horizon is near enough.

Hi there, I am interested in this. Do we know if closing down via the MVL route then using an umbrella company in place of the limited company can be done without jeopardising the Entrepreneurs Relief ?

[handyandy]

Just hope the government doesn't blow out my life-plans completely!

That seems to be their objective over the past few years whatever socio-economic group you are in! We seem to be livening in very uncertain times and planning ahead is not that simple any more.

[ChimpMaster]

I think with rules as they are you're pretty safe. Ever since the day MVLO was set up we knew it would realistically be a temporary thing. An option created by a change in tax law, which would no doubt later be killed by another change in tax law. As to exactly when that date will be, and whether it'll be before/after your planned liquidation, your guess is as good as mine!

Yes as things stand it looks OK but the additional scrutiny on ER applications is unwelcomed and I have concerns what might be announced in the next couple of budgets.

Hard to say when I will be quitting IT/contracting. It could be later this year or towards end of 2018. Just hope the government doesn't blow out my life-plans completely!