Reply to: MVL query

[Maslins]

Another factor to think on here is IR35 compliance is triggered in the first instance from employer compliance, i.e. PAYE investigations / checks. Generally the rule of thumb has been these don't occur once the company is closed, however I'm not sure that could be relied on going forward if HMRC upped compliance work; indeed the converse could apply - a well organised HMRC would use company closures as a trigger for a routine PAYE review and gateway to IR35 enquiry work.

That said, at present, the risks after closure tail off quickly, so in most instances insurance into the next year is adequate unless the taxpayer is either especially complex or particularly risk adverse.

The above does seem to be a concern for a few MVLO potential clients, that HMRC might see the liquidation as their last chance to attack the Ltd Co for IR35 so prompt an immediate investigation.

To date, we haven't seen this at all in practice...but of course that's not to say it won't ever happen.

Given how many active contractor companies there are, especially relative to the fairly tiny number of IR35 investigations, I'd be surprised if HMRC started to look into Ltd Cos already closed off. I think they'd need a very good reason to reinstate a company to challenge for something like this.

[Jessica@WhiteFieldTax]

You can get investigated on the back of an SAR for the previous tax year. Therefore regardless of who provides it, you should keep your cover for the tax year you close down and the next one. After that you should be OK.

Notionally its longer than next years SAR; generally a Self Assessment return can be enquired into up to 12 months after its submitted, unless "discovery" applies - a tax term for information coming to light which wasn't made available to HMRC. Alas they have been having a run of luck in courts and tribunals on blurring the boundaries of discovery, which is making it easier for them to operate beyond the 12 months, in which case its potentially liabilities can go back four years without fraud, longer with fraud.

Similar applies to CTSA returns for Corporation Tax

Another factor to think on here is IR35 compliance is triggered in the first instance from employer compliance, i.e. PAYE investigations / checks. Generally the rule of thumb has been these don't occur once the company is closed, however I'm not sure that could be relied on going forward if HMRC upped compliance work; indeed the converse could apply - a well organised HMRC would use company closures as a trigger for a routine PAYE review and gateway to IR35 enquiry work.

That said, at present, the risks after closure tail off quickly, so in most instances insurance into the next year is adequate unless the taxpayer is either especially complex or particularly risk adverse.

[Maslins]

But a different question.. what happens to my UTR?

? Nothing. The UTR relates to corporation tax. Inevitably once the company is shut down, the UTR will be redundant, but it's important until that point.

[DDixon]

Closing VAT..

I've deregistered for VAT (FRS) using the online HMRC portal - how soon after will I receive my final return?

Do I still need to fill in a 'VAT7 Application to cancel your VAT registration'?

EDIT: I've just managed to find on the HMRC site that if deregistering online, I should get my final return in about 3 weeks and don't need to fill in a VAT7.

But a different question.. what happens to my UTR?

[malvolio]

Sorry but PCG Membership costs are non-refundable (and always have been), they are for the year from your payment date.

You can get investigated on the back of an SAR for the previous tax year. Therefore regardless of who provides it, you should keep your cover for the tax year you close down and the next one. After that you should be OK.

[DirtyDog]

Does anyone know if I can get a pro-rata refund for PCG Membership and Randell Dorling Insurances? Or should I leave them as is (active until next June in case things go belly-up with my plan B - could I transfer them?).

You should be able to get something from the insurance back, not sure about the PCG though.

HMRC can still go back six years, though, so you may be penny wise and pound foolish to be looking for a refund at this stage.

[northernladuk]

Does anyone know if I can get a pro-rata refund for PCG Membership and Randell Dorling Insurances? Or should I leave them as is (active until next June in case things go belly-up with my plan B - could I transfer them?).

You can still be investigated after the contracts have ended and possibly after the company has ceased to exist so for the few pounds you are going to get back it would be better to keep them. I saw a post somewhere saying that if you had the QDOS one it was worth renewing that for a year or two to cover all eventualities.

[DDixon]

Does anyone know if I can get a pro-rata refund for PCG Membership and Randell Dorling Insurances? Or should I leave them as is (active until next June in case things go belly-up with my plan B - could I transfer them?).

[Clare@InTouch]

I don't suppose anyone knows how to close PAYE using Moneysoft Payroll Manager?

Go to Employer, add in the Cessation Date on the bottom of the first tab. Ensure you've answered the end of year declaration questions on the final tab. Then just file the final RTI.

This is assuming you've already filed a P45 for the employees.

[DDixon]

I don't suppose anyone knows how to close PAYE using Moneysoft Payroll Manager?

[Clare@InTouch]

Hi Clare,

Thanks for clarifying that.

What about any CT due on company income this year - will this be calculated and sent to HMRC by my accountant as part of the wind-up procedure?

D

Yes. The closure will crystallise the CT liability and it will need to be paid before the CT scheme can be shut down. Which has to happen or HMRC will object to the striking off.

It depends on who handles what part of the process for you. We prepare final accounts and advise on final liabilities/close schemes before the case is passed over to an MVL company as it then keeps the MVL fees lower & the process quicker. If you haven't had final accounts prepared yet, or they are being done by the MVL company, then they will likely settle the CT as part of their process.

[DDixon]

That's normal - if you've paid s455 then HMRC won't repay it to you until the due date for the CT in the year you repay the loan. It shouldn't stop the MVL though, it'll just be requested to be repaid to you personally and taken into account during closure.

Hi Clare,

Thanks for clarifying that.

What about any CT due on company income this year - will this be calculated and sent to HMRC by my accountant as part of the wind-up procedure?

D

[Clare@InTouch]

That's normal - if you've paid s455 then HMRC won't repay it to you until the due date for the CT in the year you repay the loan. It shouldn't stop the MVL though, it'll just be requested to be repaid to you personally and taken into account during closure.

[DDixon]

Well I am still looking to go ahead with the MVL soon and will obviously have to pay the CT due on the bill i have received but I have some questions:

1. I am fine to pay the CT due on the bill received but I am due a rebate as I previously paid extra CT (P11D) due to a loan from the co which I have paid off in full.

I've asked my accountant to check with HMRC and following his conversation with them, he states that the repayment has been deferred to 1st January 2014; the date by which I will need to pay them the outstanding liability (CT due on the bill) and the date on which they will repay you the outstanding repayment.

Does this mean the MVL process cannot be started until after 1st Jan 2014??

[Maslins]

How does that work? I always thought I had to 'buy back' whatever remains of their current value?

You can distribute them as Craig has suggested. Same way when paying a dividend during trading it doesn't have to be cash, it can be an asset of some sort.

However, same as with dividends, it's easier if you keep CGT distributions to just cash.

When you say a "few months after" in the case of closing down a previous company using Mvl is this few months from the date the company is fully disolved or from from date it went liquidation ?

thxs

There's no set time period, and unfortunately no case law (yet) to help decide. Key risk if you do it straight away is that HMRC argue you continued the same trade, simply transferring the trade from Oldco to Newco.

If there's a very clear break between Oldco ceasing to trade and Newco starting to trade, it's harder for them to argue the trade was transferred.

I would suggest that if there was a specified time period, it'd be from Oldco ceasing to trade to Newco starting to trade.