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Where Taxpayers and Advisers Meet

Enterpreneuer's relief and starting the business

panlondon1
Posts:4
Joined:Tue Apr 24, 2018 11:37 pm
Enterpreneuer's relief and starting the business

Postby panlondon1 » Wed Apr 28, 2021 12:33 pm

Hi,

in Mar 2020 I decided to close down my business in mar 2020, (I am an IT consultant) and then go via the umbrella solution as the company required (April 2020). I claimed entrepreneur's relief in my personal tax return as expected. My company was open for 13 years, so a big chunk of money was released.

I stayed with the umbrella company until Jan 2021 and then in April 2021 i was offered another contract inside IR35. The job agency insisted that I can't do via an umbrella solution but via a Ltd company only!. I told them that it has only been a year since I closed down my company but they said it's ok you can open a company at any time. I had heard about the 2 year rule but i wasn't sure where it applies, companies house allowed me to open a new company.

However, last week I saw that if you claimed entrepreneur's relief you have to wait for 2 years otherwise they will refuse the entrepreneur's relief and charge you 30% tax instead retrospectively.
I have not put any invoices, get paid etc via the company account now, no transactions via the new company. What are my options, i went back to the agency and told them that they need to put me through an umbrella. Can i get clearance from HMRC for example to start again as i don't have any tax benefit, it's all inside IR35 .

Thanks very much for any answers!

pawncob
Posts:4750
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Enterpreneuer's relief and starting the business

Postby pawncob » Fri Apr 30, 2021 4:52 pm

However, last week I saw that if you claimed entrepreneur's relief you have to wait for 2 years otherwise they will refuse the entrepreneur's relief and charge you 30% tax instead retrospectively.

Where did you read this?
With a pinch of salt take what I say, but don't exceed your RDA

ShawnaDurgan
Posts:4
Joined:Tue Jun 29, 2021 2:11 am

Re: Enterpreneuer's relief and starting the business

Postby ShawnaDurgan » Sun Jul 04, 2021 11:29 am

I also would like to start a new business. How can I start? Can you please guide me a little. Thank you!

ShawnaDurgan
Posts:4
Joined:Tue Jun 29, 2021 2:11 am

Re: Enterpreneuer's relief and starting the business

Postby ShawnaDurgan » Mon Jul 05, 2021 10:58 am

I was looking for some kind of help from you guys. For my new business promotion I started subscribing business newsletter from here https://www.sebastiaanhooft.com/ and different sources as well. Because I don't want to miss any chances to promote my business worldwide. What do you think? Does business newsletter help?

skray
Posts:44
Joined:Mon Oct 29, 2012 5:01 pm

Re: Enterpreneuer's relief and starting the business

Postby skray » Fri Jul 09, 2021 9:01 am

However, last week I saw that if you claimed entrepreneur's relief you have to wait for 2 years otherwise they will refuse the entrepreneur's relief and charge you 30% tax instead retrospectively.

Where did you read this?
Check this:
https://forbesdawson.co.uk/articles/2016/11/25/are-the-two-year-liquidation-rules-as-strict-as-they-sound/

skray
Posts:44
Joined:Mon Oct 29, 2012 5:01 pm

Re: Enterpreneuer's relief and starting the business

Postby skray » Fri Jul 09, 2021 9:50 am

I am also having a similar problem. I used to be a contractor have now moved to a full time position for over 2 years now and planning to liquidate my company now. But wondering if anything goes wrong with my full time job now what do I do? Should I only look for another full time job or contracts inside IR35, or do I still have the flexibility of outside IR35 contracts.
With hindsight if I went for MVL as soon as I accepted the offer for a permanent position I would have been safe now.
https://forbesdawson.co.uk/articles/2016/11/25/are-the-two-year-liquidation-rules-as-strict-as-they-sound/
There is a Condition D - but not sure how it is to be interpreted or if there are any case laws.

AGoodman
Posts:1286
Joined:Fri May 16, 2014 3:47 pm

Re: Enterpreneuer's relief and starting the business

Postby AGoodman » Thu Aug 05, 2021 11:24 am

It's not that they refuse ER specifically, its that if you are caught by the 2016 legislation the distribution on liquidation is treated as income.

That means you have to pay income tax, rather than capital gains tax, on the distribution and ER is not available for an income distribution.


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