Closing down company - liquidation - post ESC C16 changes

[Maslins]

For those concerned about exactly how the bonds work, hopefully this page from bis.gov.uk will help.

[mickael28]

Take a look at this factsheet http://www.nixonwilliams.com/images/...%20Company.pdf

It seems to qualify for entrepreneurs relief you need:

1. You must have held the shares in a trading company for at least 12 months up to the date trade ceased;
2. Hold at least 5% of the issued share capital of the trading company; and
3. The holder of the shares must have been an officer or an employee of the company throughout the
period concerned.

The linked document carries on explaining that:

As a rule of thumb, provided the following conditions are met HMRC should accept the company to be a trading
company:
* Non Trading income does not exceed 20% of the company’s income; and
* Net current assets do not exceed annual turnover.

Does this mean that if the Net current assets in the company exceed the annual turnover then you won't qualify for the Entrepreneurs' relief?

[Maslins]

Does this mean that if the Net current assets in the company exceed the annual turnover then you won't qualify for the Entrepreneurs' relief?

That appears to be NW's stance on it. Been a few discussions on this recently, at the moment nobody can confirm either way.

You seemingly can ask HMRC whether they're happy to consider the company trading (hence qualify for entrepreneurs relief assuming all other criteria met). See here.

[jeremytaxman]

Cheap Members Voluntary Liquidation | ESC C16 Solution | MVL Online for £995+ evidently

[Greg@CapitalCity]

Does this mean that if the Net current assets in the company exceed the annual turnover then you won't qualify for the Entrepreneurs' relief?

There is no yes or no answer to this, take a look at this thread covering the same discussion;
http://forums.contractoruk.com/accou...ml#post1574349

You will find information on "rules of thumb" and "guidance" but no black and white answer. To be fair, I am not sure where the net current assets:annual turnover ratio test comes from - though its probably tied up in the overall assessment of investment activity vs trading activity. Alan might be able to elaborate further.