Advice on getting money from my company

**TheMonkey** · 29 September 2006, 15:08

Set your sights on Northern Cyprus, earn lots, transfer the entire amount out without paying HMRC and hide...

**MarillionFan** · 29 September 2006, 15:18

It depends whether you have been in or outside IR35. Have you paid corporation tax on it.

You would be stupid not to use your tax allowances for each year, so you can take out some cash effectively tax free, and you would be best to speak to an accountant.

**JaredM** · 29 September 2006, 15:54

Can you wait until the company is 2 years old? Then surely you can wind down the company and take its assets out via taper relief? Then you'll not pay tax on most of it...

A good accountant will be able to advise you more.

**triboix** · 29 September 2006, 16:03

Originally posted by ScoobyDoo

Gentlmen,

Wondering if someone could give me some advice on taking money from my company under a very specific set of circumstances.

My wife and myself are looking to move to Spain and buy a small guest house within the next 5 years. We wouldn't be moving back to the UK after this (She is Australian, so worse case we will head out to Australia), i.e. we won't be UK tax residents.

For the last year and a half I have been keeping most of the money in the company and we've been living off her wage. The intention is to leave the UK in 5 years or less when the tax year is up and spend several months travelling or living in a tax free country and paying the rest of the money out in a lump sum and folding the company.

I'm wondering if this is the smartest thing to do, or would I be better served pulling the money out and paying tax on it and using it for personal investments, ready to pull out when required?

Appreciate any advice.

MF is right. While you are in the UK, you can withdraw money in the form of dividends. This will be effectively "tax-free" for you, as your company already paid corporation taxes on it anyway, and provided you remain a basic rate taxpayer.

You can eventually wind the company up and get the money back as a capital gain. You need to get a special document for approval by HMRC before that (apparently, it's almost automatic), so it is consider as capital gain and pay capital gain tax on it. Then any shareholder who kept his/her shares for more than 2 years (ex: you) can apply full taper relief. This means that you will actually pay capital gain tax only on 25% of the money you extract. Even if it makes you a higher rate taxpayer on this occasion (40%), that's 10% of taxes on the total. You will have some difficulties to find a simplier scheme to extract your money by going abroad!
Drawback: you can do that only if you are outside IR35.

HTH

Disclaimer: IANAL, seek legal advice, you're on your own, I said nothing, etc.

**oraclesmith** · 29 September 2006, 16:52

A word of warning

Another thread relates the tale of someone who had a bad experience with HMRC after he moved a big chunk of money into a building society with plans to skip abroad. There is probably more to it than meets the eye, but you are best to get professional advice about moving large sums about because of the money laundering regulations. :-

"He was an I.T. contractor. He attracted their attention by taking a lump of cash out of his company account and putting it into the building society.

Within two weeks he had a PAYE inspection, which led to other inspections. They then decided that he owed them extra tax, penalties and interest from over 6 years. They froze his building society account when he challenged this and put a legal charge on his house. It took over seven months just to get to the commisioners, where he won but they appealed. Then he won again, but they appealed. Then he finally won and got his monies released.

No apology, no costs, he is just glad he was insured to cover the costs of this.

He is no longer an I.T. contractor, he can't take the hassle and stress any more. The biggest thing that worries him is another run-in with the taxman, he is a permie shift manager now in a DIY store."

http://forums.contractoruk.com/threa...tml#post126105

**ASB** · 29 September 2006, 17:00

Largely been said but assuming outside IR35:-

a) Salary 5095
b) Divis for remainder of base rate

Accumulate the rest.

Wait 2 years.

ESC-C16 for wind up, then it's a capital gain, also get 75% taper relief (this reliefy may be unimportant. If you are non resident when the payment is made there is no CGT anyway.

Be careful that to company doesn't become non resident at the same time you do. There is a lovely thing called the exit charge. You would not like that.

Of course you will still have suffered CT on the accumulated profits.

Talk to an international specialist and they might just be able to do something about that. Depends on your normal residency, domicile and a bunch of things.

**TheMonkey** · 30 September 2006, 09:50

Just out of interest, how are people supposed to operate legitimately in such a minefield?

Having spoken to some "specialist" accountants dealing with building contractors (I did some consultancy for them), even they weren't sure what they were doing was 100% legit!

**triboix** · 2 October 2006, 10:14

Originally posted by TheMonkey

Just out of interest, how are people supposed to operate legitimately in such a minefield?

Having spoken to some "specialist" accountants dealing with building contractors (I did some consultancy for them), even they weren't sure what they were doing was 100% legit!

There are some "grey areas" in the tax laws, where it may be possible to "tune" the law to the interpretation that brings the most of taxes.

Ex: a non-resident is normally entitled to buy UK properties as assets. He can then rent them out and sell them back 10 years later without paying capital gain tax. This is perfectly legal, as long as this activity is considered "investing". But HMRC may argue that this is actually "trading", which will levy much more taxes on it: income tax and NIC.

Great, isn't it?

**triboix** · 2 October 2006, 10:17

Originally posted by oraclesmith

Another thread relates the tale of someone who had a bad experience with HMRC after he moved a big chunk of money into a building society with plans to skip abroad. There is probably more to it than meets the eye, but you are best to get professional advice about moving large sums about because of the money laundering regulations. :-

"He was an I.T. contractor. He attracted their attention by taking a lump of cash out of his company account and putting it into the building society.

Within two weeks he had a PAYE inspection, which led to other inspections. They then decided that he owed them extra tax, penalties and interest from over 6 years. They froze his building society account when he challenged this and put a legal charge on his house. It took over seven months just to get to the commisioners, where he won but they appealed. Then he won again, but they appealed. Then he finally won and got his monies released.

No apology, no costs, he is just glad he was insured to cover the costs of this.

He is no longer an I.T. contractor, he can't take the hassle and stress any more. The biggest thing that worries him is another run-in with the taxman, he is a permie shift manager now in a DIY store."

http://forums.contractoruk.com/threa...tml#post126105

Obviously, when you do this sort of things, you have to make sure that you do it the proper way. Paying a lump sum from your company account to yours is perfectly illegal. You have to make sure that you comply with the laws at all times.

Advice on getting money from my company