Can HMRC open an IR35 enquiry after my company closes?
Yes. HMRC has statutory time limits for opening enquiries, not dissolution. For a standard self-assessment enquiry, HMRC can go back four years from the end of the relevant tax year. Where there has been careless behaviour, this extends to six years, and in cases of deliberate non-compliance, up to 20 years. Dissolving your company does not reset these clocks or grant immunity from enquiry.
What IR35 records should you retain before dissolving?
Before dissolving, ensure you have copies of: every contract you worked under (including statements of work and extensions), any IR35 status determinations issued by clients under the off-payroll working rules (Chapter 10 ITEPA 2003 or Chapter 8 for pre-April 2021 engagements), CEST (Check Employment Status for Tax) results where available, evidence of your working practices (timesheets, correspondence, invoices), and professional IR35 assessment letters from a tax adviser. Keep these records for at least six years after the relevant tax year.
Inside IR35 — settling the deemed payment before closure
If any of your engagements were assessed as inside IR35, a deemed employment payment must be calculated and reported through payroll for the relevant tax year. Ensure all such payments are calculated, reported on your final RTI submission, and any outstanding PAYE/NIC settled with HMRC before applying for voluntary strike-off. An outstanding PAYE liability is a common reason for HMRC to object to a strike-off.
Distributing retained profits before dissolution
Many IT contractors accumulate significant retained profits in their limited companies. If you are inside IR35 for your final engagements, those profits cannot simply be extracted as a capital distribution on closure without potential challenge. Seek advice from an accountant on whether any retrospective IR35 adjustment is needed before making distributions. ESC C16 (now in statute as ITEPA 2003 s 1030A) allows distributions on dissolution to be treated as capital rather than income, but only if there is no outstanding IR35 exposure.
IR35 and Members' Voluntary Liquidation (MVL)
If your company has significant retained profits (typically over £25,000 net), a Members' Voluntary Liquidation (MVL) may be more tax-efficient than voluntary strike-off. An MVL liquidator formally winds up the company and distributes assets — but they will also review the company's affairs, including IR35 compliance. Ensure your IR35 position is clean before appointing a liquidator. Any outstanding IR35 liability will become a debt of the estate.