How long does it take to close down/liquidate company?

[northernladuk]

Everyone has their own perception and appetite to perceived risk. However, using a perfectly transparent established mechanism to reduce tax liability is perfectly acceptable regardless of the current climate IMHO. I think its a spurious argument to suggest otherwise.

Could the government retrospectively argue that you were taking the proverbial? I guess they could but the same could be said for paying divis instead of salary, flat rate VAT, company pension contributions and so on.

Indeed but does the OP know the risks? It is ok the pro's saying to can be done but becareful of the risk... I don't see anywhere where the risk has been explained. This thread doesn't give a real perception of risk hence me raising it, partly out of interest and partly because good advice includes the risks.

Clare says

If you do something for purely tax reasons then there's often an anti-avoidance provision that they can invoke.

I can't believe that the OP isn't concerned about the risk when an accountant points this out when the OP is clearly wanting to avoid tax for a personal reason. The alarm bells would be ringing for me at this point and I would want to know all the risks before going ahead with something that has a defined and used process to screw me over.

Of course they can retrospectively argue it, that is exactly what is going on all over the place at the moment hence my comments about the current situation. I am not sure what world you live in but the governement ARE trying to come down hard on the divis instead of salary. Check the threads on the public sector contractors and about the business questions on IR35. They are also actively pursing agressive tax avoidance measures. Maybe you ought to wake up and smell the coffee?

Maybe I am just over cautious and playing devils advocate on threads like this is a bit over the top but to be so blind to the fact the governement are trying to crack down on divis and other tax avoidance seems downright dangerous right now.

[Mister Clark]

Indeed but does the OP know the risks? It is ok the pro's saying to can be done but becareful of the risk... I don't see anywhere where the risk has been explained. This thread doesn't give a real perception of risk hence me raising it, partly out of interest and partly because good advice includes the risks.

Clare says



I can't believe that the OP isn't concerned about the risk when an accountant points this out when the OP is clearly wanting to avoid tax for a personal reason. The alarm bells would be ringing for me at this point and I would want to know all the risks before going ahead with something that has a defined and used process to screw me over.

Of course they can retrospectively argue it, that is exactly what is going on all over the place at the moment hence my comments about the current situation. I am not sure what world you live in but the governement ARE trying to come down hard on the divis instead of salary. Check the threads on the public sector contractors and about the business questions on IR35. They are also actively pursing agressive tax avoidance measures. Maybe you ought to wake up and smell the coffee?

Maybe I am just over cautious and playing devils advocate on threads like this is a bit over the top but to be so blind to the fact the governement are trying to crack down on divis and other tax avoidance seems downright dangerous right now.

England is slowly becoming brain washed into thinking tax avoidance is a bad thing - it isn't, it's your legal right.

Everything I do including paying myself minimal salary, setting up a company pension and eventually using the same route as the OP to extract money from my ltd (if still available when that time arrives) is perfectly lawful if you conduct yourself in the right way.

Using the example of trying to make contractors pay salary instead of divis is spurious.

If you decide the best thing for you is to operate your company in that way then that is your decision - no one is forcing you to take a contract with an organization that insists you operate in that way. Some contractors decide to operate within IR35 and pay the associated taxes, again, that's their call - if you don't like it find a contract that enables you to operate in a way that's tax efficient for you.

I hear what your saying about playing devils advocate but some times it boarders on scare mongering IMHO.

Interested to hear what accountants have to say however.

[Fandango]

NLUK is quite right in raising the point/playing devils advocate as from my initial post i didn't make it clear that i am aware of the risks associated with closing down one company and opening another.

However i completely agree with what Mister Clark has said above. I'll be talking it through thoroughly with my Accountant first before doing anything though.

Out of interest has anyone on here done this already and actually been challenged successfully by HMRC or are we realistically in the infancy of this particlaur path of Tax Avoidance with very few people having gone down this path?

[Mister Clark]

NLUK is quite right in raising the point/playing devils advocate as from my initial post i didn't make it clear that i am aware of the risks associated with closing down one company and opening another.

However i completely agree with what Mister Clark has said above. I'll be talking it through thoroughly with my Accountant first before doing anything though.

Out of interest has anyone on here done this already and actually been challenged successfully by HMRC or are we realistically in the infancy of this particlaur path of Tax Avoidance with very few people having gone down this path?

Would you mind letting us know how you got on if you do decide to take this route?

I'm interested particularly about the costs involved and how painful (or otherwise!) the whole process is.

I've seen estimates for how much it costs but they are wide ranging.

[Maslins]

The only time consuming bit is obtaining clearance from HMRC, confirming all taxes are clear. This can easily take 3 months. Otherwise the process is extremely quick.

If the liquidator's comfortable no tax liabilities will "appear" which weren't disclosed, they may well be able to pay out a distribution of some of the funds prior to full clearance being given.

Re risks, be weary of transactions in securities legislation or here. Basically this can remove beneficial tax treatment if you're deemed to be transferring the trade of the business out to a new co prior to liquidation.

[xoggoth]

Closed mine last year (ESC whatsit still in force then) and it was about 3 months. Dealing with HMRC etc not a major problem in my case but then Co Hse advertise in London Gazette etc for fixed period to ensure no objectors, just have to wait.

Do a search here, there's some other useful CUK threads.

[northernladuk]

England is slowly becoming brain washed into thinking tax avoidance is a bad thing - it isn't, it's your legal right.

Everything I do including paying myself minimal salary, setting up a company pension and eventually using the same route as the OP to extract money from my ltd (if still available when that time arrives) is perfectly lawful if you conduct yourself in the right way.

Using the example of trying to make contractors pay salary instead of divis is spurious.

If you decide the best thing for you is to operate your company in that way then that is your decision - no one is forcing you to take a contract with an organization that insists you operate in that way. Some contractors decide to operate within IR35 and pay the associated taxes, again, that's their call - if you don't like it find a contract that enables you to operate in a way that's tax efficient for you.

I hear what your saying about playing devils advocate but some times it boarders on scare mongering IMHO.

Interested to hear what accountants have to say however.

It is your legal right to do it yes... is it morally correct and to the spirit of the law is the real question. If it is neither of those you are dodgy ground. Using a system to gain advantage due to loopholes is legally correct... for now. No law is bullet proof and there is always a loophole but use them at your peril. The more abused the loophole the stronger the effort to close it and in some cases retrospectively fix it. I would quite happily use these loopholes where risk is low but blatent avoidance in this climate doesn't sit right. Now if the OP was to shut his business down for a business reason.... that's a whole different kettle of fish. He just has to be a bit smarter about his reasons.

I do agree that scaremongering is a bit over the top but I am happy to do so and them let them make their own decision. Usually most people call me a tosser and do it anyway, fair enough, have argued the case and they made a decision. What it is I don't care tbh.

Accountants will probably say it is possible but there are risks... as they have already said. Thing is it is not them that get in to trouble about it.

[Fandango]

Closed mine last year (ESC whatsit still in force then) and it was about 3 months. Dealing with HMRC etc not a major problem in my case but then Co Hse advertise in London Gazette etc for fixed period to ensure no objectors, just have to wait.

Do a search here, there's some other useful CUK threads.

So did you open up a new company whilst that one was in the process of being shut down?

[xoggoth]

Nope. Retired.

[Maslins]

Thought this PCG Q&A was relevant to this thread...although admittedly like most things doesn't give a 100% clear cut answer. However, as it's by Abbey Tax Protection who provide PCG's tax/legal helplines I thought people would be interested to read their stance.