Applying for taper relief before April

[THEPUMA]

I think there are 2 elements to this. The chances of you being challenged in the first place are pretty slim, I reckon. Historically I would have said in the region of 1%. There will probably be more scrutiny than usual between now and 05/04/08 as I would imagine there will be a plethora of liquidations.

If challenged, I don't think it would take Miss Marple to establish that there were some shenanigans afoot.

[TheFaQQer]

If challenged, I don't think it would take Miss Marple to establish that there were some shenanigans afoot.

I've always found her advice useful - the tip on transposed numbers resulting in a multiple of 9 when Sock Puppet's accounts were out by £45 was a handy one.

[mace]

I think there are 2 elements to this. The chances of you being challenged in the first place are pretty slim, I reckon. Historically I would have said in the region of 1%. There will probably be more scrutiny than usual between now and 05/04/08 as I would imagine there will be a plethora of liquidations.

If challenged, I don't think it would take Miss Marple to establish that there were some shenanigans afoot.

I think the advice that's been given that you can create a phoenix company every 3 or so years is very dodgy. The consequences could be that, if caught, you'll have to pay back the tax advantage you received when dissolving the predecessor companies plus penalties and interest and also be disqualified as a director if the Revenue see that you've been doing this multiple times. ESC stands for Extra-statutory concessions. The concession is there to reduce the tax bill for companies that have genuinely failed and for retirees. It's not intended to be given out as a form of tax relief every now and again. The HMRC will look to see things such as how well the predecessor companies were trading prior to their dissolution. Clearly, if they were turning a good profit then the reason for dissolution is very suspicious.

Remember an accountant's motive is to make money. The legal consequences generally fall on ourselves.

[philip@wellwoodhoyle]

There is another aspect that I don't think has been clearly made on this thread.

That is when a company applies under ESC C16, HMRC usually write back to give their approval to the company being wound up using the informal voluntary route, rather than formal liquidation. Their reply letters never mention their agreement to CGT treatment of the distribution.

In their manual (Inspectors Bible), they actually say that the inspector can retrospectively say that the distribution is liable to income tax (i.e. as a dividend) rather than CGT in cases where they identify a tax saving motivation for the company being wound up.

I've never heard of them challenging in this way, but it is something else up their sleeve and something I always warn clients about "just in case".