Closing down company

[Bradley]

Liquidation

The whole taper relief thing works on an Inland Revenue concession.

The concession that Simon's talking about comes into effect if you're striking-off the company under s652a of the companies act. This is and cheaper and less formal way of "liquidating" a company.

If you wanted to avoid relying on the concession then you could go down the formal liquidation route but that can cost a few thousand.

However, in my experience the concession is only denied where there is outstanding tax or returns due.

[zeitghost]

Re: Liquidation

I had a letter back from the IR giving permission in a couple of weeks.

That reminds me, have to close the bank account.

[zeitghost]

Re: Liquidation

Ooo er, just as well I checked, one cheque hasn't cleared yet...

[ASB]

That concession

There is another issue with taper relief. ISTR that you have to be a trading company to get it. As usual there is no exact definition.

If, however, you have a considerable pile of cash you may find you can't get the taper relief.

Doubtless one of the accountants can fill in the gaps.

[JoelHarding]

Re: Surplus Cash Doesn't Scupper Business Asset Taper Relief

I don't think that's right. Where there is a pile of cash from surplus trading income, there is a concession I believe so that business asset taper relief is not affected.

Also, I think it is worth correcting Mark Snowdon's figures above. If a husband and wife's CGT allowances of £8,200 each are used, then because of the interaction with 75% taper relief, £65,600 can be extracted from the company tax free with the balance at 10%.

NB Why would you take the rest out as dividend and pay 25% rather than 10% on a capital distribution, unless your basic rate allowances are unused?

[Mark Snowdon]

thanks Joel

I wasnt sure of the impact of taper relief, I had the impression that it wasnt guarranteed.

Have you a link or reference for us to look up ?

Thanks

Mark

[JoelHarding]

Re: thanks Joel

Yes see Tax Bulletin 53 at the following URL:

www.inlandrevenue.gov.uk/...chor164658

In particular "As Park J. pointed out in the O'Neill case, it is the exception rather than the rule that means a company is not carrying on a business when it puts its money on deposit."

[Mark Snowdon]

Re: thanks Joel

As a service to others who may be considering similar. The rule on getting the capital gain rather than divi is Extra Statuary Concession c.16 and is detailed in the publication IR1.