Entrepreneur's relief and dividends

[Pegasus]

Thanks Moscow Mule.

I did go through this HMRC link:
http://www.hmrc.gov.uk/cgt/disposal.htm

And based on the above, I felt that I would be eligible for this relief when I close down my limited company anytime after 2 years (even if I actively work here only for lets say 6 months or one year).

But when I talked to my accountant, he says I wont be elgible, because:
1) I need to "actively trade" through that limited company for at least 2 years to be eligible, and
2) If I have been drawing out dividends from the company, then I would not be eligible for entrepreneurs' relief!

When I asked him for any links/documents to substantiate the above two points, he says that it is a new ruling, so proper documentation is not available yet.

Thats why posted this question on the board. Do you think the accountant is correct or is mis-informed?

Any further help/pointers will be much appreciated.

Thanks.

[Crossroads]

Any information (or useful links) from which we can find out what are the eligibility criteria for qualifying for Entrepreneurs' Relief?

Suppose I am doing IT contracting outside IR35, for a year (annual revenue of 120K, taking annual salary as 15K, taking dividends upto 40K, and leaving the rest in company account). If I get the company closed after 2 years, will I be eligible for this relief on closing?

Thanks.

The important bit is whether or not your are granted ESC C16. This will establish whether or not you can take the undistributed profits as capital rather than income.

If ESC C16 is granted then you and apply ER as long as the basic qualification terms are met - the main one being the lifetime limit - and if you have reached the limit you probably don't need to worry about the 8%

[Gonzo]

When I asked him for any links/documents to substantiate the above two points, he says that it is a new ruling, so proper documentation is not available yet.

Thats why posted this question on the board. Do you think the accountant is correct or is mis-informed?

This is probably not the answer that you want to hear but my accountant when I asked said we would need to wait to see the rules, but his tone was not hopeful for people like us.

[Alfie]

Thanks Moscow Mule.

I did go through this HMRC link:
http://www.hmrc.gov.uk/cgt/disposal.htm

And based on the above, I felt that I would be eligible for this relief when I close down my limited company anytime after 2 years (even if I actively work here only for lets say 6 months or one year).

But when I talked to my accountant, he says I wont be elgible, because:
1) I need to "actively trade" through that limited company for at least 2 years to be eligible, and
2) If I have been drawing out dividends from the company, then I would not be eligible for entrepreneurs' relief!

When I asked him for any links/documents to substantiate the above two points, he says that it is a new ruling, so proper documentation is not available yet.

Thats why posted this question on the board. Do you think the accountant is correct or is mis-informed?

Any further help/pointers will be much appreciated.

Thanks.

I've not heard anything to substantiate the dividend part, and my last update course on the subject was last week. So unless they have quietly changed the law in the last week, it's wrong.

Is is possible you misunderstood, or he explained it badly? As in - you can't have a capital dsitribution because you've already drained the company dry by taking the whole retained profit as dividends and there's nothing left to declare as a CD?

ER is really quite simple as far as disposing of a whole Ltd Co is concerned, where it gets far too complicated is when making a material or associated disposal. Simplifying the tax system my