MVL, entrepreneur tax relief and dividends

[AnotherGuy]

I read there is a need to get ID certified and sign a declaration in front of solicitor.

Out of curiosity, is this not a problem now with COVID-19? Anyone having issues with this?
Perhaps this can be done remotely by video chat?

Cheers.

[Scoooby]

Capital Gains Tax (CGT) is due on a disposal of qualifying business assets - i.e the liability will arise in the tax year when the qualifying business assets are disposed of. It is not possible to dispose of the same business assets twice and span over the disposal over two tax years to claim the annual exempt amount twice..

First time I've heard this viewpoint on this. Does anyone agree, especially with first hand experience, that the first and final distributions from a MVL need to be treated as a single event for the purposes of GCT and ER?

I'm thinking about the possible scenario whereby ER might be scrapped in the next tax year (from say April 2021). If you kicked off an MVL in the next few months and got the first distribution (75% of cash in the business) paid out in the current tax year, but the final one was not paid until after April 2021.

I'm this situation, would it not be reasonable to assume that you could still apply for ER on at least the first distribution of funds as the rules currently apply in the current tax year?

I guess the same principle applies with being able to utilise GCT allowances across different tax years in this kind of situation.

[northernladuk]

I read there is a need to get ID certified and sign a declaration in front of solicitor.

Out of curiosity, is this not a problem now with COVID-19? Anyone having issues with this?
Perhaps this can be done remotely by video chat?

Cheers.

Does it have to be a solicitor? Many of these things can also be signed by teacher, police officers and, probably most usefully, at a post office?

[Chart Accountancy]

I read there is a need to get ID certified and sign a declaration in front of solicitor.

Out of curiosity, is this not a problem now with COVID-19? Anyone having issues with this?
Perhaps this can be done remotely by video chat?

Cheers.

You can post the originals to your accountant to certify (if the accountant is chartered/certified).

[Maslins]

I read there is a need to get ID certified and sign a declaration in front of solicitor.

Out of curiosity, is this not a problem now with COVID-19? Anyone having issues with this?
Perhaps this can be done remotely by video chat?

The declaration of solvency needs to be witnessed by a solicitor, or commissioner of oaths. Afraid this is a strict legal requirement for the company to enter liquidation, not an arbitrary thing liquidators can be flexible on. It's not something where anyone of professional standing (accountant/teacher/doctor etc) can complete it.

Yes this is proving a problem during lockdown. Some solicitors are still doing it. We believe either via the low tech method of having a reasonably big room(!) and staying far apart, or by some kind of video system where they can watch you sign it, then get the original to counter sign, then give back.

There are no hard rules re the ID, so a lot more flexibility on that.

[eazy]

Distribution Spanning Two Tax Years

When I closed my company down few years ago, the process started in January, the first CGT distribution was in one tax year and final distribution in the next year, this was not planned.

I contacted HMRC on how to complete the self assessment, CGT allowance could be used for both years. I claimed both ER & CGT for payments spanning two tax years without any comeback from HMRC.

[SeededLoaf]

Once clearance is received from HMRC to distribute as capital, does the liquidator subtract any of the CGT or is that all paid through self assessment?

How soon do you normally find out if you're entitled to the relief after you make a claim?

[Maslins]

Once clearance is received from HMRC to distribute as capital, does the liquidator subtract any of the CGT or is that all paid through self assessment?

The latter. The liquidator typically won't have anything to do with your personal tax. They're just liquidating the company.

How soon do you normally find out if you're entitled to the relief after you make a claim?

You'll need to decide whether you're entitled to it or not, and submit your self assesssment tax return on that basis (remember that's basically what "self assessment" means, you are assessing your own situation). HMRC then have their normal window to enquire. 12 months if you've made full disclosure. 6 years if it's a discovery assessment (eg you didn't declare everything relevant, and they found out something significant from other means). 20 years in situations of fraud.

[katdan]

Qualifing condition for ER

Hi,

This is the first time I posted in contractor UK forum. Apologise if I haven't done it correctly. The information and tips posted in this thread are very useful.

I have a few questions on Entrepreneur Tax Relief and hope any of you can help me. My accountant is being a bit of a pain where she will charge me for every single question I ask :-(

My husband and I own a limited company (50-50 % shares between 2 of us). We're thinking to dissolve our company as my husband has accepted a PAYE contract (via an umbrella company) and I intended to look for a permanent position in the near future. Here are the questions I have for ER:

1) If we do qualify for ER, does this mean my husband and I will entitle to capital gain allowance of £12300 individually (e.g £24600 total for 2 of us)?
2) I read from various sites that we need to be an employee or director of the company to be qualified for ER. Due to my husband is about to start his new PAYE contract in next month, we're thinking that he should not receive any salary from our company going forward so he doesn't need to pay more tax. But does this mean he is no longer an employee and hence he will not qualify for ER claim?
3) Previously, my accountant advised to pay my husband £300 a month to prove he is still an employee. Can I just pay him £10 per month, or just one off directorship fee for his director work as a prove he is still a director in order to claim ER?

Thanks in advance.

Take care and stay safe.

[Maslins]

@katdan your accountant will be best placed to help with this, as they'll have access to all relevant info. We can only go based on what you post, so potentially could be missing significant and relevant facts. However, I've tried answering your Qs based on what I anticipate is most likely:

1) Yes...though the annual exemption applies to any capital gains, not just those benefiting from ER. ER is relevant to reduce the tax rate on the gain above the exempt amount.
2/3) If you're director/co sec, then you don't need to worry about the employee bit. Ie you can stop taking a salary, but this won't stop you being director.