Reply to: To invest.. or not

[BlasterBates]

We've heard this before.....the collapse is coming! many many times over the last 5 years.

One thing to bear in mind economics, is not "real" it's not subject to the law of Physics. It is simply psychology. People give you cars, TV's and Carribeam holidays for bits of paper or even because you transfer some electronic digits from one computer to another; in other words it's simply about confidence.

Put simply.....while there are minerals in the ground, sheep and cows in the fields and people who can build things, you don't have to have a problem if you don't want one, you just need to make sure people have the confidence to keep "doing it"....that's it.

Of course our system of transferring electronic bits and (essentially) worthless paper sometimes ends up with people feeling less confident that their electronic bits and paper are safe, so people just stay at home and refuse to do anything (simply put). All you need to do is keep people moving.

[SneakySimon]

Exactly - economy is up tulip creek - US falling over, Europe struggling and now the asian market struggling. The original recession was never decisavly dealt with and now it is coming back to haunt.

In my humble opinion is that this is the first truly global receession which will call for a global response. Not confident this will be accomplished.

[dx4100]

might be worth watching this before putting money on the market

BBC Speechless As Trader Tells Truth: "The Collapse Is Coming...And Goldman Rules The World" - YouTube

[SneakySimon]

FTSE

I spread bet on the FTSE - when you get it right, make lots. Get it wrong = ouch!!

FYI, the FTSE is on a bit of a rally right now but is expected to retrace back to 4900 and depending on the fall out of the Greece debt, then could go either way. Its one thing to remove greece but must remember many banks / companies will loose a lot of money if they default which will have a knock on effect.

[richy]

Follow up, ltd co index tracker

Thanks for all the replies with info.

Entrepreneurial relief doesn't apply to my ltd co then. No worries.

I've got index tracker, and it already went up some points today. Soon as Greek debt 50% written off.. FTSE should bounce up enough to pull the cash back out.

Anyone taken out a ltd co index tracker? Just wondering on the setup, I looked before, and Hargreaves Landsown said it was just regular account, but in company name. ltd co would not put much in.. maybe 25% of cash warchest (put in while market still down, sold when ftse hits 6000 again)

Cheers rich

[Lewis]

You don't have to declare you'll never be a director again, you're declaring the trade is ceasing. Clearly transferring an existing contract from one company to another, in which the shareholders and directors are the same, is not ceasing to trade.

Yep that is exactly the point I was making. I just thought your earlier comment saying "you" cease trading was a little ambiguous and could be misinterpreted as I'm leaving the world of IT or IT contracting or something like that. You simply state that the company is ceasing to trade. I don't think we are in disagreement, I was just trying to add a little clarity.

[Lewis]

...

@Lewis - So if Joe Bloggs is a shareholder again of an IT company that does very similar work to the old IT company (that he was also a shareholder of), then the HMRC could take an interest into the reasons the old IT company was closed down in the first place. If the close-down was tax motivated only, they would look to reverse the tax benefits gained.

Yep, that all sounds logical. I was just pointing out you don't have to declare "I joe blogs am ceasing to trade", you declare "XYZ Consulting Ltd is ceasing to trade". It is am important point because the implication from the earlier post was that you couldn't be an IT contractor again.

[Greg@CapitalCity]

Is there a concrete figure? I presume not.

No, not that I am aware of. Its based more on intentions. Do you plan to cease contracting for the forseeable future? Has your contract ended, with no new contract in sight? You would need to outline your commercial reasons for putting forward some sort of phoenix operation (if queried by the HMRC).

[Scrag Meister]

We're talking about S.703 ICTA 1988 'Cancellation of a tax advantage from certain transactions in securities' - which blots the phonenix landscape. This comes into play when a company is wound up, (and the reserves distributed as capital), and then a new company is formed with the same shareholders and following the same trade.

@Lewis - So if Joe Bloggs is shareholder again of an IT company that does very similar work to the old IT company (that he was also a shareholder of), then the HMRC could take an interest into the reasons the old IT company was closed down in the first place. If the close-down was tax motivated only, they would look to reverse the tax benefits gained.

What is the time limit on this?

I stop trading now but decide to get back into contracting in 6/12/18 months time when some permie role turns to tulip?

Is there a concrete figure? I presume not.

[Clare@InTouch]

When you say "you're" ceasing to trade. Don't you mean "your Ltd Company" is ceasing to trade. Which when shuting a company down is exactly what is happening. So he can honestly make the declaration.

I'm pretty confident you don't need to write to HMRC stating what you have implied, which is "I Mr Joe Blogs will never work in IT as a Director of a Ltd Company again".

That said, I believe I heard somewhere that where the primary motive of the shut down is to avoid tax, which it would be if opening a new company the next day, then the concession should not be granted. But that is not the same as declaring you won't be an IT Director ever again...

You don't have to declare you'll never be a director again, you're declaring the trade is ceasing. Clearly transferring an existing contract from one company to another, in which the shareholders and directors are the same, is not ceasing to trade.

If you have a genuine reason for closing a company you can still claim under ESC C16 and then open a new company doing the same thing at a later date.

Per HMRC - http://www.hmrc.gov.uk/specialist/esc.pdf

C16. Dissolution of companies under Sections 652 and 652A Companies Act 1985:
distributions to shareholders

A distribution of assets to its shareholders by a company which is then dissolved under
Section 652 or Section 652A Companies Act 1985 (or any comparable provisions) is
strictly an income distribution within Section 209, ICTA 1988. In most circumstances,
and providing that certain assurances are given to the Inspector before the event, the
Revenue is prepared for tax purposes to regard the distribution as having been made
under a formal winding up so that the proviso to Section 209(1) applies. The value of the
distribution is then treated as capital receipts of the shareholders for the purpose of
calculating any chargeable gains arising to them on the disposal of their shares in the
company.

The assurances include:
- The company does not intend to trade or carry on business in future; and
- intends to collect its debts, pay off its creditors and distribute any balance of its
assets to its shareholders (or has already done so); and
- intends to seek or accept striking off and dissolution.
- The company and its shareholders agree that
- they will supply such information as is necessary to determine, and will pay, any
Corporation Tax liability on income or capital gains; and
- the shareholders will pay any Capital Gains Tax liability (or Corporation Tax in
the case of a corporate shareholder) in respect of
62any amount distributed to them in cash or otherwise as if the distributions had
been made during a winding-up.

[Greg@CapitalCity]

We're talking about S.703 ICTA 1988 'Cancellation of a tax advantage from certain transactions in securities' - which blots the phonenix landscape. This comes into play when a company is wound up, (and the reserves distributed as capital), and then a new company is formed with the same shareholders and following the same trade.

@Lewis - So if Joe Bloggs is a shareholder again of an IT company that does very similar work to the old IT company (that he was also a shareholder of), then the HMRC could take an interest into the reasons the old IT company was closed down in the first place. If the close-down was tax motivated only, they would look to reverse the tax benefits gained.

[Lewis]

Agreed. When you apply for ESC C16, which is what allows you to take final money as a Capital Gain, one of the requirements is that you sign a statutory declaration stating you're ceasing to trade. You're obviously not ceasing, therefore you wouldn't be able to honestly make such a declaration, therefore no Capital Gain and no Entrepreneur's Relief (legally at least).

When you say "you're" ceasing to trade. Don't you mean "your Ltd Company" is ceasing to trade. Which when shuting a company down is exactly what is happening. So he can honestly make the declaration.

I'm pretty confident you don't need to write to HMRC stating what you have implied, which is "I Mr Joe Blogs will never work in IT as a Director of a Ltd Company again".

That said, I believe I heard somewhere that where the primary motive of the shut down is to avoid tax, which it would be if opening a new company the next day, then the concession should not be granted. But that is not the same as declaring you won't be an IT Director ever again...

[Clare@InTouch]

Hector frowns on phonenixing, so if you do that best stock up on the vaseline - especially since you'll be working at the same Clientco, that's 100% taking the piss.

Agreed. When you apply for ESC C16, which is what allows you to take final money as a Capital Gain, one of the requirements is that you sign a statutory declaration stating you're ceasing to trade. You're obviously not ceasing, therefore you wouldn't be able to honestly make such a declaration, therefore no Capital Gain and no Entrepreneur's Relief (legally at least).

[SneakySimon]

Trading

I’ve always had the theory that I take out a good chunck of cash from company and invest in stocks and shares – made quite a lot, certainly enough to pay the tax. I tend to invest in Blackrock or Fidelity which the accounts over the years have returned @8%, with some years being 28%.

I work with so many contractors who leave cash in the company to avoid paying income tax and call it a warchest while in reality it is just devaluing due to inflation. Make the money work!!

I would perhaps wait a bit. G20 is about to kick off and if the outcome is not positive, then expect a further slide early next week. Next resistance level on FTSE is 4800, if it breaks that it is going very low!!

[b0redom]

Hector frowns on phonenixing, so if you do that best stock up on the vaseline - especially since you'll be working at the same Clientco, that's 100% taking the piss.