Company Closure / ESC C16 / CGT to pay

[Crossroads]

Quick question:

Company effectively ceased trading: mid 2008
Accounts filed, creditors paid, assets sold and capital distribution made: late 2008
Useless accountant forgets to send 652 as instructed to C/H until director realises it has been missed: May 08

Therefore company will not be struck off until Aug 08 at earliest

Do the directors who have received the capital distribution pay the CGT due in their 2008/2009 SATR (i.e. when funds distributed and help in non-interest bearing account until company closed) or 2009/2010 (when company struck off)?

[ChimpMaster]

You pay CGT in the year that the gain is realised, i.e. for you this would be in the year that the distribution was received into your personal a/c.

[ASB]

ESC C16 wasn't something you could "just do". You had to ask for permission (though with Entrepreneurs relief this may have changed).

[PhilAtBFCA]

Esc16

You still have to apply for an ESC16 agreement before the ditribution is made, if not it is a dividend. See here for details.

Phil

[Crossroads]

Cheers Tazman, that is what I was expecting.

ASB, Phil - ESC C16 was applied for and granted etc etc..

[Kess]

I'm also in the process of closing down my company and have received approval to use ESC16.

As we're close to the end of this FY, does anyone know if it's permitted to do the capital distribution in two parts - half this month and the rest next month - to spread the CGT burden over two FYs?

[Clare@InTouch]

I'm also in the process of closing down my company and have received approval to use ESC16.

As we're close to the end of this FY, does anyone know if it's permitted to do the capital distribution in two parts - half this month and the rest next month - to spread the CGT burden over two FYs?

Not as far as I'm aware, unless there's a concession I don't know about. The whole point of a capital distribution is that it's paying out the final monies. If you paid money out that wasn't final, by definition it wouldn't be a CD it would be a dividend/loan.

[THEPUMA]

I'm also in the process of closing down my company and have received approval to use ESC16.

As we're close to the end of this FY, does anyone know if it's permitted to do the capital distribution in two parts - half this month and the rest next month - to spread the CGT burden over two FYs?

It is possible to do this in certain circumstances. We have a client who we are closing down currently and, subject to any changes in the Budget regarding future CGT rates, will be splitting the distribution over 2 tax years. The justification is that not all the company's invoices will be paid by 05/04/10 so the full distribution cannot be paid before then.

PUMA

[Clare@InTouch]

It is possible to do this in certain circumstances. We have a client who we are closing down currently and, subject to any changes in the Budget regarding future CGT rates, will be splitting the distribution over 2 tax years. The justification is that not all the company's invoices will be paid by 05/04/10 so the full distribution cannot be paid before then.

PUMA

Interesting - are there any restrictions to this?

[northernladuk]

It is possible to do this in certain circumstances. We have a client who we are closing down currently and, subject to any changes in the Budget regarding future CGT rates, will be splitting the distribution over 2 tax years. The justification is that not all the company's invoices will be paid by 05/04/10 so the full distribution cannot be paid before then.

PUMA

i would hazard a guesss that the requestor is asking for a split to minimise tax liabilities rather than a business justification though so this might not help him?