ESC C16 and distribution of assets

[castoff101]

As has been discussed in other threads, new rules are coming in on 1st March regarding the closing of a Ltd company and the use of a formal liquidation process.

I have read that it is the profits that have to be distributed to the shareholders before the 1st March deadline rather than any agreement from HMRC...

So can some of the accountants indicate if this is the case and acceptable to HMRC?

If this is okay, then profits are withdrawn asap. The application then sits with the HMRC, until it is accepted and all is okay, or it is rejected, and you are not any worse off than if you waited for the approval, but then was too late as past the March deadline...

Presuming a distribution is the way to go, is it just a matter of closing the company accounts and transferring the money over to a personal account? What documentation is needed to support this from the company point of view?

Thank you.

[northernladuk]

Remember you have to apply for and be allowed to do this under ESC. You cannot just do it and assume they will be happy with it. There were a few threads a week or two ago saying a few of the experienced accountants on here could push it through in time but as I say that was a few weeks ago now.

You need to speak to Alan at Nixon Williams or Clare at InTouch who I believe both stated they are actively pushing this through very hard for their clients. I guess your own accountant others that advertise here can do it as well. I name Alan and Clare as they are the only ones I have seen saying they are pushing it.

Edit : Saying that they maybe doing retrospective applications but just wanted to point out you hadn't mentioned applying for it so apologies if you were already aware.

[Clare@InTouch]

What matters is the timing of the actual distribution, not the ESC C16 agreement itself (although I'd suggest writing asap anyway as HMRC take around a month to reply). So, close the company bank account and transfer the money into a non-interest bearing personal account.

HMRC should still agree the ESC treatment even after 01/03 as long as the cessation and distribution happened prior to that.

As NLUK says, you should talk to your accountant to get an idea of the full process you're going to need to follow.

[castoff101]

Thank you both for your replies. It is with my accountant but he has been busy with the end of year SA... He is waiting to check the letter to be sent to HMRC, but I am tempted to just send my own letter to HMRC just to get the ball rolling. Can't see any problems if two are sent?

Letter will give an undertaking as per the text on the esc c16 HMRC web site.

[Clare@InTouch]

It might confused HMRC, especially if the two letters are not the same or are sent to a different address. Can you gee your accountant up a bit? It's now after the SATR deadline so he shouldn't be quite so snowed under.

[castoff101]

Thanks Clare, I have some time still left I guess.

Just that I really do not like waiting!

[Clare@InTouch]

Thanks Clare, I have some time still left I guess.

Just that I really do not like waiting!

I don't blame you, I'd be the same. Just give your accountant a gentle nudge (every day until he does it )

[northernladuk]

Thanks Clare, I have some time still left I guess.

Just that I really do not like waiting!

Try writing a letter every day for 4 years. It worked for a guy I saw on telly the other day

[Greg@CapitalCity]

Thank you both for your replies. It is with my accountant but he has been busy with the end of year SA... He is waiting to check the letter to be sent to HMRC, but I am tempted to just send my own letter to HMRC just to get the ball rolling.

The HMRC have confirmed you can take your final dividend payment before 01 Mar 2012, AND before you have received clearance from the HMRC for ESC C16 approval, and the final distribution will be treated as a capital gain under the current rules.

See - Dissolution of Companies