MVL Online

[pianoman]

Entrepreneurs relief isn't something that you apply for, you simply need to state on the capital gains page of your tax return if ER applies to the gain. You wouldn't need prior approval from HMRC to claim this relief, but if they were to open an enquiry to your tax return then they may question your eligibility to it at that point.

In order for the gain to qualify you the following must have applied for a minimum period of 12 months immediately prior to disposal of the company:

• You must be an officer or employee of the company.
• You must have at least 5% of the issued share capital of the company with at least 5% of the voting rights.
• The company must be a trading company (as opposed to being classed as a closed investment holding company).

Hope this helps!
Craig

Thanks Craig from the reply. I suppose I should rephrase the question whether anyone has had there eligibility refused for ER based on not being classed as a trading company?

[Maslins]

Thanks Craig from the reply. I suppose I should rephrase the question whether anyone has had there eligibility refused for ER based on not being classed as a trading company?

Well, legislation making liquidations a viable option in a lot of these situations only came in 1 March 2012. As it was much cheaper to do before that, I can't imagine many will have happened between 1 March and 5 April 2012. Therefore most cases won't even have submitted their personal tax return with the claim yet, let alone passed the window for HMRC to enquire into it.

Whether or not you got entrepreneurs relief should be no different now to what it was under the old ESC C16. I haven't heard of any ESC C16 cases being challenged on the grounds of too high a cash balance...but that doesn't mean it hasn't happened. Certainly there haven't been any high profile cases setting significant precedent.

[pianoman]

Well, legislation making liquidations a viable option in a lot of these situations only came in 1 March 2012. As it was much cheaper to do before that, I can't imagine many will have happened between 1 March and 5 April 2012. Therefore most cases won't even have submitted their personal tax return with the claim yet, let alone passed the window for HMRC to enquire into it.

Whether or not you got entrepreneurs relief should be no different now to what it was under the old ESC C16. I haven't heard of any ESC C16 cases being challenged on the grounds of too high a cash balance...but that doesn't mean it hasn't happened. Certainly there haven't been any high profile cases setting significant precedent.

Thanks for the reply - appreciated!

[Nixon Williams]

Thanks Craig from the reply. I suppose I should rephrase the question whether anyone has had there eligibility refused for ER based on not being classed as a trading company?

The funds from winding up a company will be entered in the Capital Gains section of your tax return.

HMRC can then query the entries and may seek more information on the proceeds etc.

So, if HMRC do not enquire into the return if you are not eligible for Entrepreneur's Relief (ER) there will not be any direct implication, although my advice would be to correctly complete your tax return.

If HMRC do enquire into your capital gains and you claimed ER but the company was not a trading company, then clearly HMRC will seek to recover the lost tax and I suspect penalties would also be due.

[pianoman]

The funds from winding up a company will be entered in the Capital Gains section of your tax return.

HMRC can then query the entries and may seek more information on the proceeds etc.

So, if HMRC do not enquire into the return if you are not eligible for Entrepreneur's Relief (ER) there will not be any direct implication, although my advice would be to correctly complete your tax return.

If HMRC do enquire into your capital gains and you claimed ER but the company was not a trading company, then clearly HMRC will seek to recover the lost tax and I suspect penalties would also be due.

That seems a bit vague. Would you therefore be able to get some form of pre-ok from HMRC that you are a trading company? Seems stupid that you would apply on the basis you geninuely think you are a trading company but then get told you are not and then get hit with a penalty

[Maslins]

That seems a bit vague. Would you therefore be able to get some form of pre-ok from HMRC that you are a trading company? Seems stupid that you would apply on the basis you geninuely think you are a trading company but then get told you are not and then get hit with a penalty

Welcome to the world of self assessment. You tell them what you think the situation is, then wait a couple of years to see if they say "we think you're wrong".

For certain things you can apply for advanced clearance. Consensus tends to be that by doing so, you're admitting you're concerned you might not qualify. Therefore many think it's a better tactic to just make the claim.

[pianoman]

Welcome to the world of self assessment. You tell them what you think the situation is, then wait a couple of years to see if they say "we think you're wrong".

For certain things you can apply for advanced clearance. Consensus tends to be that by doing so, you're admitting you're concerned you might not qualify. Therefore many think it's a better tactic to just make the claim.

Thanks for reply.

[alphadog]

I too have engaged mvlonline to action my MVL. Very pleased with the process so far.

Best thing about entrepreneurs relief on my self assessment is the time between receiving the distributions from mvlonline and when I have to declare them. If I was to receive my distributions today for example (18 Apr 2013), I won't have to declare and pay the entrepreneurs relief until 31 Jan 2016

Given that Sir Mervyn and Co. keep printing money and inflation continues to roar away, I am quite happy about that

[alphadog]

I too have engaged mvlonline to action my MVL. Very pleased with the process so far.

Best thing about entrepreneurs relief on my self assessment is the time between receiving the distributions from mvlonline and when I have to declare them. If I was to receive my distributions today for example (18 Apr 2013), I won't have to declare and pay the entrepreneurs relief until 31 Jan 2016

Given that Sir Mervyn and Co. keep printing money and inflation continues to roar away, I am quite happy about that

Incidentally, if an individual were to emigrate and become tax resident in another country between receiving their distributions and the date when they are required to declare and pay their entrepreneurs relief CGT...

I assume they would have to make a final UK self assessment at or near the time they left the UK and pay it then, ie, early? Or can they wait until when it would ordinarily have been required to declare, in this case 31 Jan 2016? Or - and I suppose this is unlikely - they would not be required and declare and pay them in the UK at all as they have become non-resident for tax purposes?

[Maslins]

Incidentally, if an individual were to emigrate and become tax resident in another country between receiving their distributions and the date when they are required to declare and pay their entrepreneurs relief CGT...

I assume they would have to make a final UK self assessment at or near the time they left the UK and pay it then, ie, early? Or can they wait until when it would ordinarily have been required to declare, in this case 31 Jan 2016? Or - and I suppose this is unlikely - they would not be required and declare and pay them in the UK at all as they have become non-resident for tax purposes?

Hello, thanks for the kind words. Distribution made today would fall in the tax year ending 5/4/2014 which would need paying 31/1/2015 (not 2016).

Re emigrating, can become complex...but generally speaking I think you're still UK tax resident for CGT purposes for up to 3 years after leaving. HMRC don't like the idea of people having a 1 year holiday somewhere to avoid hefty CGT bills. Not something I've seen in practice, so saying this from exam memory 5+ years ago...happy to be corrected if someone else knows better.