Help needed please

[Monkeypower]

If you don't need the cash, just dump the lot into a pension as an employer contribution and save the corp tax as well. Then close company without the cost of MVL.

[Maslins]

If your company currently has £20k retained profit and cash, and you're thinking about closing, there can be a big difference between:
- taking £15k as a dividend now, then just having £5k left to take as part of closure,
- taking £20k as part of closure.
The former would lead to £15k taxed as dividends, £5k taxed as CGT. The latter would be £20k taxed as CGT.
Your optimal situation will depend largely on your other income in the year, though potentially also if you've made other capital gains in the year.

[Lance]

okay thanks for the advice folks.

Basically, does this sound reasonable?

I need access to some cash now, so am going to take a £15000 dividend (as normal), then have my final accounts done and then will take the remaining after corporation tax as another dividend.
whether i go dormant or strike off, is irrelevant in terms of the £15000 i take out now, right??

Thanks again

correct

[kup007]

okay thanks for the advice folks.

Basically, does this sound reasonable?

I need access to some cash now, so am going to take a £15000 dividend (as normal), then have my final accounts done and then will take the remaining after corporation tax as another dividend.
whether i go dormant or strike off, is irrelevant in terms of the £15000 i take out now, right??

Thanks again

[northernladuk]

On THIS forum? That's Shocking.

I honestly thought that everyone who dared to speak, Knew Everything.

I am traumatised.

Oh the irony.

[simes]

Relying on an internet forum, where some of the comments already include statements that are simply wrong, is dangerous.

On THIS forum? That's Shocking.

I honestly thought that everyone who dared to speak, Knew Everything.

I am traumatised.

[Maslins]

To the OP, this is not a simple situation, and there's lots of different things to consider. If you don't have an accountant, seriously think about getting one ASAP. Trying to DIY something like this will almost certainly prove to be a false economy. Relying on an internet forum, where some of the comments already include statements that are simply wrong, is dangerous.

In short though, it doesn't sound like an MVL is a suitable option for you. If you did want to close, you can likely qualify for CGT treatment without spending a grand or two on an MVL, a strike off would suffice, and this may be more tax efficient than taking a large dividend.

[Paralytic]

Am I right in saying that if company has £24,600 or less in net assets, and the shareholders are a husband and wife (for example), then it can be struck off, £12,300 provided to each shareholder's (no CGT due, assuming no other gain that year) and thereafter no limitation in starting up again within 2 years (since BADR/ER has not bee applied)?

[Lance]

As the OP only has £20,000 profit it's better just to either take a dividend or transfer it into his pension fund.

The MVL approach is really best used when you have a significant amount of profit.

If it’s less than £25k then you can do a strike off without a liquidator.
This may be a better route.
Citizens advice bureau has a guide on this on their website.

But personally I’d do as you say as a dividend distribution won’t limit options in the next 2 years.

[Patrick@Intouch]

There is no need to even consider MVL if the company has less than £25k net assets in the business. You can work out what your net assets are by deducting all liabilities (what the company owes - for corporation tax and possibly to you) from all company assets (what the company owns - probably bank balance plus any monies owed from customers).

You could go down the strike off route, following the production of a final set of accounts to report any profits and corporation tax to HMRC and then take any retained profits as a capital distribution. This capital distribution would then be taxed under capital gains tax rules with the first £12,300 being tax free and the remainder being taxed at 10% under Business Asset (formerly Entrepreneur's) Relief. In order to apply this treatment your company must have been trading for the last 2 years and you must not carry on the same, or a similar trade or activity at any time in the next 2 years, other than through employment.

The other option would be to take any retained profits as dividends, produce a final set of accounts (this will be required for either option) and then submit form DS01 to Companies House to have the company struck from the register. There are no restrictions on period of trade or the period between the strike off and when you can carry on the same, or a similar trade or activity again with this option. The rate of tax applied will depend on your other income so far this tax year (7.5% within basic rate band and 32.5% in the higher rate band)

[eek]

As the OP only has £20,000 profit it's better just to either take a dividend or transfer it into his pension fund.

The MVL approach is really best used when you have a significant amount of profit.

[northernladuk]

Speak to some MVL companies and ask them. MVLOnline is a very good place to start and if you are lucky Maslins (the owner) might actually come on and give you some of his time for free.. But still. Call them.

Just remember though. Just because you get an inside gig it doesnt mean closing your company is the first option. What happens if this lasts three months and an outside gig appears. You won't be able to start a new company up for two years so you'll be stuck via brolly.

[kup007]

Hello

Hope you can help. Im not an accountant and very confused with what I am reading on the net.

I want to close my ltd company down (yes, you've guessed it , due to IR35). I have not yet taken any dividend this tax year. I am sooo confused about MVL and strike off. Basically I have very simple accounts, I do not have debts to pay and after corporation tax up to my company end date, I will have ~£20,000 profit. I am very confused about what should be done and not done with regards to taxation and dividends.

Basically, If I am still invoicing clients a week before my notice to close, then I cannot go down the strike off route, right? So, what do i do?? Shall I go dormant for a few months, and then go via the strike off route? or shall i just not do any business activity for three months?? Also, I want to take out a dividend of £~15,000. Can I do that now as normal without it affecting my closure accounts, or will it affect the accounts in any way??
Also, say after the last corporation tax payment, i have a net profit of £3000 remaining, do i get this as a dividend again , or what? I am not sure what happens. If i took a large dividend now or a bigger one at the end, would it make a difference??

Basically, I havent got a clue and want someone to put me straight.