IR35 & MVLs

In his budget yesterday, the Chancellor announced changes to the off-payroll working rules (known as IR35) for those working in the private sector. The responsibility for operating the off-payroll rules will move from the individual to the organisation, agency or other third party engaging the worker. This change will not be introduced until April 2020. Small organisations will be exempt and HMRC will apparently offer support ahead of the implementation.

Some of your clients who have historically used personal service companies may now become employees under the changes.

Your clients may consider using a members’ voluntary liquidation (MVL) in order to extract their monies from their company. At Redman Nichols Butler, our MVLs start from a very competitive £750 plus disbursements plus VAT.

Entrepreneurs relief

From 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months.

The Chancellor’s Halloween Horror show for unsecured creditors…..

From 6 April 2020, the government will move its VAT, PAYE, Income Tax, employee NICs and Construction Industry Scheme deductions to preferential status. Currently these claims rank as unsecured claims in insolvency proceedings together with the trade creditors meaning all creditors rank equally.

The changes mean that when a company enters into formal insolvency proceedings the unsecured creditors are less likely to be paid anything at all as the government will have the first (and largest) claim on any funds.

Employer NICs and corporation tax will still rank as unsecured claims.

Chancellor spooks directors…… with tax abuse and insolvency

Following Royal Assent of The Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency.

There will be more details on this to follow shortly but we would urge any of your clients in financial difficulties to seek advice at the earliest opportunity in order to avoid personal liability as a result of the non-payment of HMRC’s debts.

If you consider that your clients would benefit from advice from us, please do not hesitate to call.