Reply to: 2 year rule to start LTD up issue

[Lance]

Hope that's not going to become a general rule in prof. I kinda like posting in here

I don't really know what I'm talking about, but I think you can get away with saying anything, as long as you caveat it with the fact that you don't know what you are taking about.

IANAL
IDKWITA

[northernladuk]

Consider not posting in professional until you know what you're talking about.

Hope that's not going to become a general rule in prof. I kinda like posting in here

[jamesbrown]

Once you closed down, no one bothers about it
there are millions of companies being closed every week.
so chill and go ahead and start a new company and start the contracting job.
best time to be a contractor

Consider not posting in professional until you know what you're talking about.

[eek]

Once you closed down, no one bothers about it
there are millions of companies being closed every week.
so chill and go ahead and start a new company and start the contracting job.
best time to be a contractor

That's utter crap - TAAR is designed to allow HMRC to get their claws into people playing games such as closing a company, pocketing the money as a capital gain (rather than income) and starting a new company.

It's a particular rule designed explicitly to cover a particular set of actions and HMRC will make full use of it to recover tax they see to be due.

it should be fine.
tax year not due yet

And again - what has that to do with what was actually posted...

[RobScott]

I agree.

The replies to this thread were concise and factual (apart from ensignia).

What they weren’t was sugar-coated.

I’m not sure how else this information could have been delivered.

As a point - chapter 10 (client assessments) will not be repealed until April 2023, so there are going to be many contractors who will jump too soon onto the outside bandwagon.

it should be fine.
tax year not due yet

[RobScott]

Hi All

Just looking for some advice

I stopped trading July 2020 and closed company down (as at the time I believed everything would be ir35 etc)
Accountant dragged their feet in doing final accounts and didn't complete until Jan 2021 and engaged MVL
(with a refund in corp tax due from HMRC had to wait for refund with covid delays)
I then chased HMRC for refund so company could be closed which I got in August 2021
MVL started their process in September 2021 and instructed me to take money out etc
They completed their process and filed everything March 2022

I tried to setup again thinking that 2 years would be from end of trading from last company i.e. August 2022 but been told I can't until March 2024 - 2 years from MVL end process, same trade etc.

I was the only director and Mrs was down as company sec

I wnet inside ir35 but really need to setup again as may be landing outside ir35 role , anything I can do without having to pay taxes on all the 70k that got released from last company? As that would be disastrous after all this.

I'm not looking to go against the law but would it be reasonable to start up again showing a clear 2 years of non trading ? Would HMRC look favourably on this ?

Could I setup with Mrs as director and me as company sec ? would that be seen unfavourable and / or agencies won't be happy as I am not director ?

FYI - I did try and stop the MVL process for this reason but was told once started can't stop has to play out and close.

I'm not looking for anyone to make smart comments but would really appreciate thoughts on the best way forward.

Many Thanks in Advance

Once you closed down, no one bothers about it
there are millions of companies being closed every week.
so chill and go ahead and start a new company and start the contracting job.
best time to be a contractor

[northernladuk]

As a point - chapter 10 (client assessments) will not be repealed until April 2023, so there are going to be many contractors who will jump too soon onto the outside bandwagon.

Looking at the evidence on here and listening to other contractors off the boards the people that jumped too soon to MVL their LTD's when it hit seem to make up a good majority of those who are going to jump straight back outside. You'd think they would have learnt something from the first mistake but it appears not.

[cojak]

My viewpoint on forums - if you don't like the attitude of the regular posters - other forums are available.

I'm sorry but I don't think any new or infrequent poster can or should determine how a forum that has been going 15+ years should be moderated...

I agree.

The replies to this thread were concise and factual (apart from ensignia).

What they weren’t was sugar-coated.

I’m not sure how else this information could have been delivered.

As a point - chapter 10 (client assessments) will not be repealed until April 2023, so there are going to be many contractors who will jump too soon onto the outside bandwagon.

[Maslins]

Anyway, all my distributions were in 2021 + umbrella contract + lots of pension contributions. Am i right that if we pay back the tax the capital distribution will be treated as a salary or dividend and therefore will impact the pension threshold?

If you fell foul of the TAAR, the distributions from the liquidation would be deemed dividends (not capital gains, so things like ER/BADR become irrelevant too). If you've already submitted an SA return declaring liquidation distributions via CGT, you'd need to amend it and hike your dividends instead. Typically this will be ~33% tax instead of ~10% tax.

You're right though, this could potentially change your annual cap for pension contributions, so the impact might be more significant.

What your best option is will depend on the numbers involved:
- if company was liquidated with ~£26k net assets, and you're earning six figures, you may decide it makes sense to take the hit on the liquidation distributions to get better tax treatment on current income (assuming you can justify outside IR35).
- if the liquidation distributions were much higher, and/or current earnings more modest, it'll likely make sense to ensure you take care for the 2 years to avoid triggering the TAAR.

[jamesbrown]

I'm sure there are lots of people i the same boat and I'm one of them but my concern is that even if I repay tax setting up a new limited will move me couple places up on HMRC priority list to investigate rightness of being outIR35.

Anyway, all my distributions were in 2021 + umbrella contract + lots of pension contributions. Am i right that if we pay back the tax the capital distribution will be treated as a salary or dividend and therefore will impact the pension threshold?

On the first point, no one can answer that because HMRC doesn't publish its approach to risk, obviously. But I don't think your concern is misplaced.

On the second point, it would be reclassified as a dividend distribution and you would need to resubmit you SATR (where your presumably claimed BADR too), ordinarily within 12 months of the filing deadline, so 31 Jan 2024 assuming the distributions were post April 5 2021.

[eek]

I'm sure there are lots of people i the same boat and I'm one of them but my concern is that even if I repay tax setting up a new limited will move me couple places up on HMRC priority list to investigate rightness of being outIR35.

Anyway, all my distributions were in 2021 + umbrella contract + lots of pension contributions. Am i right that if we pay back the tax the capital distribution will be treated as a salary or dividend and therefore will impact the pension threshold?

Pass - Hopefully Maslins may appear to answer that point..

[fabios]

I'm sure there are lots of people i the same boat and I'm one of them but my concern is that even if I repay tax setting up a new limited will move me couple places up on HMRC priority list to investigate rightness of being outIR35.

Anyway, all my distributions were in 2021 + umbrella contract + lots of pension contributions. Am i right that if we pay back the tax the capital distribution will be treated as a salary or dividend and therefore will impact the pension threshold?

[eek]

Your advice is appreciated. I am sure you have had to ask a question on a forum regarding something you were not clear about (could be anything and not just accounts related). I would like to see your reaction if someone replies in the same tone and says you are getting free advice. Remember you were once a novice too and learn to respect others.

My viewpoint on forums - if you don't like the attitude of the regular posters - other forums are available.

I'm sorry but I don't think any new or infrequent poster can or should determine how a forum that has been going 15+ years should be moderated...

[rs1969]

Ignoring the rant let's keep this simple

The rules are very simple - you choices are to repay the appropriate amount of tax on any disbursements that were not 2 years old when you restart your company.


So 2 disbursements
1st 1/8/2021 £50,000
2nd 1/4/2022 £20,000

Now lets look at dates

Date	Amount where tax due	Reason
6/4/2023	£70,000	both disbursements within the 2 year window
2/8/2023	£20,000	Initial disbursement is 2 years old Second disbursement is less than 2 years old Note HMRC may query this and go after the lot
2/4/2024	£0	2 years has past nothing to worry about

And while you may not like people being rude - the advice above from WTT or an accountant would cost you £100+. I don't see any problem with regular posters getting annoyed when we are saving you money by providing proper / decent advice for free..

Your advice is appreciated. I am sure you have had to ask a question on a forum regarding something you were not clear about (could be anything and not just accounts related). I would like to see your reaction if someone replies in the same tone and says you are getting free advice. Remember you were once a novice too and learn to respect others.

[eek]

I have closed down my limited company last year via MVL and now not sure what to do.

Ignoring the rant let's keep this simple

The rules are very simple - you choices are to repay the appropriate amount of tax on any disbursements that were not 2 years old when you restart your company.


So 2 disbursements
1st 1/8/2021 £50,000
2nd 1/4/2022 £20,000

Now lets look at dates

Date	Amount where tax due	Reason
6/4/2023	£70,000	both disbursements within the 2 year window
2/8/2023	£20,000	Initial disbursement is 2 years old Second disbursement is less than 2 years old Note HMRC may query this and go after the lot
2/4/2024	£0	2 years has past nothing to worry about

And while you may not like people being rude - the advice above from WTT or an accountant would cost you £100+. I don't see any problem with regular posters getting annoyed when we are saving you money by providing proper / decent advice for free..