Close of Ltd company

[Chart Accountancy]

Er, no. Stop muddying the water w/ discussion about striking off, which is not relevant for amounts over 25k because no tax advantage has been obtained (post ESC16). You are under the incorrect impression that the TiS is concerned with ER. It isn’t. The TiS is found in ITA 2007 whereas ER is part of the TCGA 1992. They are different things and you are conflating them. The TiS is about capital distributions in general. It applies first and regardless of whether you seek additional relief via ER. According to you, it is not possible to fail the TAAR unless a tax advantage has been obtained through ER, which is wrong. There is no “2 year restriction on ER”, rather on capital distributions that should’ve been declared as dividends or salary.

Alternatively, if the amounts are over 25K, the company can be kept alive for several years, to pay out distributable reserves within the shareholders basic rate bands over that time as to benefit from a 7.5% income tax charge compared to 10% ER. If however the shareholders are higher rate tax payers then depending on the amount to be distributed on the dissolution if exceeds £25,000, the entire amount will be treated as an income distribution so a member's voluntary liquidation would be likely more tax efficient.

[jamesbrown]

In order that the Anti-phonenix rules to apply, it needs to proved that winding-up was driven mainly by the avoidance of income tax and it applies to any liquidation distribution. The ER is a relief to reduce the tax rate on the capital gain so it does not protect from you TAAR. If you fail under TAAR, you will lose your entitlement to ER as the capital distribution treatment would be denied. It is only if you close via a strike off, the TAAR does not apply.

I think you need to re-read what I wrote

( Incidentally, there are four conditions to be met for the TAAR to apply. )

[Chart Accountancy]

Hi friends,

Is it correct that once you close a Ltd company and made use of capitals gains allowance, you can't open another one, without tax/penalty, for 2 years?

Also, can one's spouse who was a shareholder in the closed company, apply for a new ltd company without further tax implications?

Thanks

I have provided a few answers above. If you are striking off the company with up to £25K distributions and the shareholders make use of the capital distribution treatment, the TAAR will not apply so you are not restricted to open a new company without further tax implications (provided that IR35 is not being questioned).