selling my company shares and closing shop, at least for a while

[arby]

I have a limited company from which I have not taken out much in the way of dividends so the company account has a balance of roughly £35K after satisfying all tax liabilities. I have read of a mechanism whereby I sell my share (the one and only share) for 90p on the pound to a specialist company engaged in this practice and I then treat the proceeds as a capital gain subject to entrepreneur's relief. The alleged advantage over member's voluntary liquidation is that I could start a new limited company in the same field without falling afoul of anti-phoenixing rules because I have sold the company rather than having liquidated it. The specialist company does the admin for 10% of my company's retained profit.

Clever or too good to be true? I'm not currently trading at the moment so the idea of freeing up my profit (albeit in a slightly more expensive fashion than MVL) is of interest because I can go back into my chosen field if another opportunity arises. But if I take a step back it does look like a anti-phoenixing rule avoidance mechanism which might be a red flag to HMRC?

[eek]

I have a limited company from which I have not taken out much in the way of dividends so the company account has a balance of roughly £35K after satisfying all tax liabilities. I have read of a mechanism whereby I sell my share (the one and only share) for 90p on the pound to a specialist company engaged in this practice and I then treat the proceeds as a capital gain subject to entrepreneur's relief. The alleged advantage over member's voluntary liquidation is that I could start a new limited company in the same field without falling afoul of anti-phoenixing rules because I have sold the company rather than having liquidated it. The specialist company does the admin for 10% of my company's retained profit.

Clever or too good to be true? I'm not currently trading at the moment so the idea of freeing up my profit (albeit in a slightly more expensive fashion than MVL) is of interest because I can go back into my chosen field if another opportunity arises. But if I take a step back it does look like a anti-phoenixing rule avoidance mechanism which might be a red flag to HMRC?

!0% of retained profits? Maslin's who post here have a company that will do it for £995+VAT Members Voluntary Liquidation | MVL Online®

[northernladuk]

If it were that clever it would be standard advice that's well documented and everyone would be doing it surely?

[MrMarkyMark]

If it were that clever it would be standard advice that's well documented and everyone would be doing it surely?

Just like a lot of other things, maybe OK for now, but I don't see a good future in it

[jamesbrown]

I have a limited company from which I have not taken out much in the way of dividends so the company account has a balance of roughly £35K after satisfying all tax liabilities. I have read of a mechanism whereby I sell my share (the one and only share) for 90p on the pound to a specialist company engaged in this practice and I then treat the proceeds as a capital gain subject to entrepreneur's relief. The alleged advantage over member's voluntary liquidation is that I could start a new limited company in the same field without falling afoul of anti-phoenixing rules because I have sold the company rather than having liquidated it. The specialist company does the admin for 10% of my company's retained profit.

Clever or too good to be true? I'm not currently trading at the moment so the idea of freeing up my profit (albeit in a slightly more expensive fashion than MVL) is of interest because I can go back into my chosen field if another opportunity arises. But if I take a step back it does look like a anti-phoenixing rule avoidance mechanism which might be a red flag to HMRC?

Quite apart from the specifics of the TiS legislation and ER, I don't think it makes any sense in your scenario. There's a new statutory limit (25k, IIRC) on a capital distribution upon having the company struck off, without any formal winding up. Surely it's going to be much cheaper to take a final dividend and then have the company struck off for 10 quid. This is pretty much regardless of how much dividend tax you're paying on the 10k.

[Maslins]

I have a limited company from which I have not taken out much in the way of dividends so the company account has a balance of roughly £35K after satisfying all tax liabilities. I have read of a mechanism whereby I sell my share (the one and only share) for 90p on the pound to a specialist company engaged in this practice and I then treat the proceeds as a capital gain subject to entrepreneur's relief.

So just to check my understanding, you have a company with £35k net assets, and you sell it to a third party for £31.5k (90% of £35k)? You then pay capital gains tax on £31.5k, so assuming annual exemption and entrepreneurs relief, your after tax cash in pocket is ~£29.5k.

If you were hypothetically to do an MVL, you'd pay circa £1.5k all in (inc VAT etc) in fees. You then pay capital gains tax on £33.5k, so with same assumptions, your after tax cash in pocket is ~£31.25k.

So ignoring any other differences (I appreciate your primary concern seems to be the transactions in securities rules), you're ~£1.75k better off with the MVL.

Does beg the question what/how the purchaser deals with things...but I guess that's not your problem.

I'm unsure of all the small print of the TiS legislation, but it wouldn't surprise me if it would bite in your proposed plan anyway. Yes it wouldn't be a liquidation, but it would still involve you trying to get CGT treatment from ending one business only to start a very similar one soon after.

[Crossroads]

Can't see it being worthwhile in your position... who is the "specialist company"?

[jamesbrown]

I'm unsure of all the small print of the TiS legislation

It's been a while since I read it but, aside from the TAAR on pheonixing (2yr rule), the only thing I recall along these lines (about when TiS bites on different forms of disposal) is that ongoing control/ownership is not allowed, subject to criteria (e.g. >25% of the share capital IIRC). In other words, the OP sounds vaguely plausible, in principle, but it doesn't really make sense in practice. In the OP's case, I probably wouldn't bother with an MVL either, although it depends somewhat on the objectives (i.e. hassle vs. saving every last pound in tax as a higher rate tax payer in the year(s) the initial and final distribution are received).

[adubya]

Can't see it being worthwhile in your position... who is the "specialist company"?

And are they "QC approved" ?

[fannyadams]

This sounds like the inTouch thing, although they were offering it for people with much larger reserves than 35K. I don't know the details as I decided it was outside my risk/comfort zone, but they were offering to buy for 90% of the value.