Originally posted by Alan @ BroomeAffinity
View Post
- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Reply to: Members Voluntary Liquidation
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Members Voluntary Liquidation"
Collapse
-
Originally posted by Maslins View Post@Alan I know a few firms who recommend that, indeed have done for over a decade (so nothing to do with ESC C16 changes). My understanding is it's less about the benefit of CGT treatment on close down, more about minimising exposure to IR35. Obviously a questionable tactic...but theory is it means HMRC can only ever go back a couple of years with any IR35 claim, so risk is reduced.
"At XXX, we are always on the look out for opportunities for company directors to close their current company and start a new one, Why? Because of tax saving opportunities of course, which HM Government have made available to you, in the right circumstances, since 2008. How does it work?
If you close down your current company and start a new one, the funds that are left in the company after it ceases to trade and after all third party liabilities have been allowed for are available to the shareholder(s). These funds are treated in effect as the proceeds from the disposal of your shares. They do not need to be regarded as dividends when they are extracted from the company.
Take an example, assume that you have taken all that you can from the company without paying any higher rate tax, and that after 2 years, there are £50000 of funds sitting in the company, yours for the taking, but how do you do this? If you took them as dividends, the tax on £50000 would be £16000 and more. If you instead close down the company, the proceeds are currently received as a capital gain under “Entrepreneurs Relief”. Normally, when you have a capital gain, the first £11000 (currently) of gain is tax-free and you pay tax at 18% or 28% dependant on whether you are a higher rate taxpayer on your other earnings for the year. Under Entrepreneurs relief, the rate of tax is 10%. Therefore, the capital gains tax you pay would be about £4000, a saving of £12000, a no brainer! All totally above board, and you are fully keeping your head below the “Revenue parapet”. We have closed down over 500 companies this way and saved the shareholders of the order of £4-5 million."
Leave a comment:
-
Originally posted by BrilloPad View PostIs "I am trying to evade the two year rule" not valid?
Leave a comment:
-
Originally posted by Alan @ BroomeAffinity View PostNothing to stop you doing that but you're not stopping contracting so ER can't be claimed.
Leave a comment:
-
Originally posted by Sausage Surprise View PostWhat about closing the company for personal reasons i.e. you've split up with the wife who happens to a 40% shareholder and you want to sever all ties (just in case).
Leave a comment:
-
Originally posted by Sausage Surprise View PostWhat about closing the company for personal reasons i.e. you've split up with the wife who happens to a 40% shareholder and you want to sever all ties (just in case).
Yes, hypothetically your wife could transfer her 40% shareholding to you, but if you're splitting up, it's not hard to imagine that she might not be particularly inclined to make your life easy. A liquidation is a reasonable way of getting a third party involved to ensure finality on the company, and to an extent, ensure shareholders are treated fairly.
However, if shortly after the liquidation you reconciled with your wife, made her a 40% shareholder in the new company, then you repeated the situation a couple of years later.....!
Leave a comment:
-
Originally posted by Sausage Surprise View PostHmm..
Any suggestions for a valid reason then?
Leave a comment:
-
Originally posted by TheFaQQer View PostThen you can't claim ER.
IANAA.
Any suggestions for a valid reason then?
Leave a comment:
-
Originally posted by Alan @ BroomeAffinity View PostCan you answer following the question honestly with "yes"?
I am intending to close down those company and start a new one for commercial reasons rather than gain a tax advantage?
Leave a comment:
-
... it's untested in the courts...
You probably have a better chance of being struck by lightening twice than having HMRC go after you as the first ever case of someone being accused of gaining a tax advantage via a MVL.
But I'm not a cowboy, so it's up to you.
Leave a comment:
-
@the OP my view is in line with others I'm afraid. Is there any non-tax motivated reason for the closure?
@Alan I know a few firms who recommend that, indeed have done for over a decade (so nothing to do with ESC C16 changes). My understanding is it's less about the benefit of CGT treatment on close down, more about minimising exposure to IR35. Obviously a questionable tactic...but theory is it means HMRC can only ever go back a couple of years with any IR35 claim, so risk is reduced.
Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: