Tax efficient withdrawal (Closing ltd company)

[Greg@CapitalCity]

Hi did you get an answer from your accountant on this ? I was thinking the same thing if I go down the MVL route and then I find HMRC wont allow ER, are you just better off noting doing MVL and simply taking the cash out all as divs ?

Maybe correct. If you are a higher rate tax payer, then closing down via MVL without ER will mean you get the first £10,600 tax free, and pay 28% capital gains tax on the rest. If you go down the dividend route, then depending on your earnings those dividends will be taxed at 25% (higher rate tax rate) or 36% (additional rate tax rate). If your total gross earnings for the year exceeds £100k then you start to lose your personal allowance as well.

Put those variables into a spreadsheet, and you'll then get your answer.

[Maslins]

I'm in a similar position - my accountant said it should be ok to claim ER but what happens if I pay 3.5k to MVL then apply for ER and get knocked back.

Then I guess (as with deciding other not 100% certain things like whether you're inside IR35 or not) your personal tax return gets enquired into a while after being submitted, they challenge it, and it depends who backs down/whether it goes to court.

The liquidator will have done their bit, so I can't see them offering to refund any money.

I spoke to Abbey Tax helpline via PCG last week and they tell me that I will not be eligible for ER as the balance in my account is too large.

Interesting. I wonder what their general policy on this kind of thing is (ie what amount is "too large").

Like I said in my previous post, claiming entrepreneurs relief isn't a new thing that's come about since 1 March 2012. The only new thing is that (if >£25k assets) you need the MVL to get CGT treatment rather than dividend.

I therefore think it's just as apt a question to say who since April 2008 (when entrepreneurs relief replaced taper relief) applied for ESC C16, what was the cash balance at the end, did you claim entrepreneurs relief, and did it get challenged.

...think I'll start a new thread for this, as whilst not many people will have successfully gone through the MVL process recently, I'm sure lots will have done the above.