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Previously on "selling my company shares and closing shop, at least for a while"

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  • craigy1874
    replied
    Surely this transaction will be caught by GAAR, it is a totally tax motivated transaction.

    Leave a comment:


  • bmb
    replied
    Originally posted by arby View Post
    In theory this mechanism has only been needed since the advent of the anti-phoenixing rules of April 2016.
    Arby - did you go ahead with this in the end?

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  • bmb
    replied
    Originally posted by fannyadams View Post
    This sounds like the inTouch thing, although they were offering it for people with much larger reserves than 35K. I don't know the details as I decided it was outside my risk/comfort zone, but they were offering to buy for 90% of the value.
    Hi Fanny. Interesting hearing this is an "inTouch thing". How did they make you aware about this? I can't see anything on their website? I am currently with Nixon Williams and thinking of switching to them

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  • jamesbrown
    replied
    Originally posted by arby View Post
    In theory this mechanism has only been needed since the advent of the anti-phoenixing rules of April 2016.
    The TiS legislation has been around for years. The most important change in 2016 was simply to clarify the time period as being 2yrs. If you were engaged in phoenixing prior to these changes, you'd still have been in trouble. Now, we at least have a little more clarity on the time period.

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  • arby
    replied
    Originally posted by northernladuk View Post
    If it were that clever it would be standard advice that's well documented and everyone would be doing it surely?
    In theory this mechanism has only been needed since the advent of the anti-phoenixing rules of April 2016.

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  • arby
    replied
    Originally posted by eek View Post
    !0% of retained profits? Maslin's who post here have a company that will do it for £995+VAT Members Voluntary Liquidation | MVL Online®
    But it's not an MVL - it's a sale of the company.

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  • Crossroads
    replied
    Hmm.. A warchest of something like £300k would see around £245k extracted versus £265k-£270kish via an MVL. If any risk can somehow be mitigated I can see the attraction if it sidesteps the 2 year MVL 'issue'. Surely a risk of it being seen as the bad kind of avoidance though...

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  • fannyadams
    replied
    This sounds like the inTouch thing, although they were offering it for people with much larger reserves than 35K. I don't know the details as I decided it was outside my risk/comfort zone, but they were offering to buy for 90% of the value.

    Leave a comment:


  • adubya
    replied
    Originally posted by Crossroads View Post
    Can't see it being worthwhile in your position... who is the "specialist company"?
    And are they "QC approved" ?

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  • jamesbrown
    replied
    Originally posted by Maslins View Post
    I'm unsure of all the small print of the TiS legislation
    It's been a while since I read it but, aside from the TAAR on pheonixing (2yr rule), the only thing I recall along these lines (about when TiS bites on different forms of disposal) is that ongoing control/ownership is not allowed, subject to criteria (e.g. >25% of the share capital IIRC). In other words, the OP sounds vaguely plausible, in principle, but it doesn't really make sense in practice. In the OP's case, I probably wouldn't bother with an MVL either, although it depends somewhat on the objectives (i.e. hassle vs. saving every last pound in tax as a higher rate tax payer in the year(s) the initial and final distribution are received).

    Leave a comment:


  • Crossroads
    replied
    Can't see it being worthwhile in your position... who is the "specialist company"?

    Leave a comment:


  • Maslins
    replied
    Originally posted by arby View Post
    I have a limited company from which I have not taken out much in the way of dividends so the company account has a balance of roughly £35K after satisfying all tax liabilities. I have read of a mechanism whereby I sell my share (the one and only share) for 90p on the pound to a specialist company engaged in this practice and I then treat the proceeds as a capital gain subject to entrepreneur's relief.
    So just to check my understanding, you have a company with £35k net assets, and you sell it to a third party for £31.5k (90% of £35k)? You then pay capital gains tax on £31.5k, so assuming annual exemption and entrepreneurs relief, your after tax cash in pocket is ~£29.5k.

    If you were hypothetically to do an MVL, you'd pay circa £1.5k all in (inc VAT etc) in fees. You then pay capital gains tax on £33.5k, so with same assumptions, your after tax cash in pocket is ~£31.25k.

    So ignoring any other differences (I appreciate your primary concern seems to be the transactions in securities rules), you're ~£1.75k better off with the MVL.

    Does beg the question what/how the purchaser deals with things...but I guess that's not your problem.

    I'm unsure of all the small print of the TiS legislation, but it wouldn't surprise me if it would bite in your proposed plan anyway. Yes it wouldn't be a liquidation, but it would still involve you trying to get CGT treatment from ending one business only to start a very similar one soon after.

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  • jamesbrown
    replied
    Originally posted by arby View Post
    I have a limited company from which I have not taken out much in the way of dividends so the company account has a balance of roughly £35K after satisfying all tax liabilities. I have read of a mechanism whereby I sell my share (the one and only share) for 90p on the pound to a specialist company engaged in this practice and I then treat the proceeds as a capital gain subject to entrepreneur's relief. The alleged advantage over member's voluntary liquidation is that I could start a new limited company in the same field without falling afoul of anti-phoenixing rules because I have sold the company rather than having liquidated it. The specialist company does the admin for 10% of my company's retained profit.

    Clever or too good to be true? I'm not currently trading at the moment so the idea of freeing up my profit (albeit in a slightly more expensive fashion than MVL) is of interest because I can go back into my chosen field if another opportunity arises. But if I take a step back it does look like a anti-phoenixing rule avoidance mechanism which might be a red flag to HMRC?
    Quite apart from the specifics of the TiS legislation and ER, I don't think it makes any sense in your scenario. There's a new statutory limit (25k, IIRC) on a capital distribution upon having the company struck off, without any formal winding up. Surely it's going to be much cheaper to take a final dividend and then have the company struck off for 10 quid. This is pretty much regardless of how much dividend tax you're paying on the 10k.

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  • MrMarkyMark
    replied
    Originally posted by northernladuk View Post
    If it were that clever it would be standard advice that's well documented and everyone would be doing it surely?
    Just like a lot of other things, maybe OK for now, but I don't see a good future in it

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  • northernladuk
    replied
    If it were that clever it would be standard advice that's well documented and everyone would be doing it surely?

    Leave a comment:

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