I am a sole practitioner of a part time practice working around my children and looking for a bit of advice.
So I have an IT contractor (100% shareholder) whose contract was ended due to the new IR35 rules that into place recently. This is the only reason he stopped trading. He is now working under an umbrella company but for the same end user client. He has in excess of £25k in cash and wants to distribute this after an MVL and claim Entrepreneurs Relief.
Given the TAAR's, distributions may be treated as income in the following circumstances:
1. If the company is a close company. Anwer = it is
2. If the shareholder is involved with a similar trade or activity within 2 year. Answer = As an employee
3. If the intention of the winding-up is to obtain a tax advantage. Answer = Only winding up because his contracts were pulled.
On the above basis can I still claim ER relief for him?
Thanks for your help with this.