End of ESC C16 1/3/12.

[Nixon Williams]

Hi Alan

Good job you're my accountant then

In my case, I was planning to see where I am at the end of my current contract (ends mid-March currently and I'm not sure if there will be an extension) and my plan was to use this legislation to close my company and take the cash out if I've reached my goal (and I think I will have).

I have deliberately not been going over the 40% tax bracket each year that I've contracted so that I can take the rest out using Entrepreneur's Relief and there will certainly be more than £50000 of money in there.

I'll get in touch with my account controller and find out what's what, because maybe I should start taking money out this tax year rather than leave it in there.

Glad to help

As you will be contracting at least until mid-March, you will not be able to utilise the ESC C16 method.

We can go through the numbers and see which route you prefer but it is likely that you would save by using the formal liquidation method.

Alan

[xoggoth]

Ah! Incomprehensible PDF/iXBRL forms, ever more complex legislation, now an end to a cheap and simple shutdown method. Good to see the government making progress in handing ever more money to lawyers and accountants.

[Nixon Williams]

Good to see the government making progress in handing ever more money to lawyers and accountants.

I agree, although this is not something that will benefit contractor accountants such as Nixon Williams etc, the formal liquidation has to be done by a qualified insolvency practioner and independent from the company's accountant.

[xoggoth]

qualified insolvency practicioner

Ah yes! According to Wikipedia, while IPs quite often have an accountancy background and a few active practitioners are lawyers it is not necessary to be qualified as either as, since 1986 , there has been a direct entry route to the profession. The direct route being the obtaining Of a licence from:

Insolvency Practitioners Association
Institute of Chartered Accountants in England & Wales
Institute of Chartered Accountants in Ireland
Institute of Chartered Accountants of Scotland
The Law Society
Law Society of Northern Ireland
Law Society of Scotland
Association of Chartered Certified Accountants

Only 7 out of the 8 are law or accountancy associations! So technically, nowt to do with ordinary accountancy companies. I suspect the distinction is entirely academic to most people. Lawyers, solicitors, practitioners of whatever, all people who make a huge living as go betweens between normal people and quite unecessarily complicated and ever more complex laws that never consider the needs of ordinary people.

John Wayne would have had a saner approach to dissolving companies I reckon.

[Ruprect]

So for large sums you liquidate, pay same tax as before, but have to shell out £5k to a liquidator too? What a pointless waste of time and money

[Mr_Z]

Does anyone know if the changes have been approved for definite now. If so for a company closing post 1st March with less than 25k is it definite that HMRC permission now not needed to treat as Capital?

[Ruprect]

Incidentally will this lead to a reduction in the cost of liquidation? Liquidators competing for business?

[northernladuk]

So for large sums you liquidate, pay same tax as before, but have to shell out £5k to a liquidator too? What a pointless waste of time and money

Or great Plan B for someone.................

[Ruprect]

Or great Plan B for someone.................

I did think that. How hard can bog standard contractor co liquidations be?

[ChimpMaster]

So for large sums you liquidate, pay same tax as before, but have to shell out £5k to a liquidator too? What a pointless waste of time and money

I have been quoted £2k by my accountant (he isn't the liquidator).

I wonder though: with the old ESC16, HMRC still had to 'approve' the move, and therefore, extraction of funds as capital gain was not guaranteed.

If we go down the liquidation route, does this circumvent the need for 'approval' by HMRC, i.e. is it guaranteed to provide company closure as we would want it?