Extracting final surplus in multiple transactions?

[Maslins]

Worth mentioning the personal tax treatment on withdrawals in the latter part of a company's life should be based on facts, not personal preference.

Eg:
- your company has ceased trading,
- you then work out numbers and realise it has £26k final net assets,
- you take £2k today deeming it to be dividend,
- you take £24k tomorrow deeming it to be final capital receipt.
Ok so HMRC may well never look at it, but if they did, you'd struggle to justify this. The split of the withdrawals is very artificial, and they'd easily win the argument that this should be £26k taken out as final funds post cessation. Hence assuming you didn't liquidate, you'd have it all taxed on you as dividends, whereas what you likely wanted was £2k dividends, £24k CGT.

Relating this to the OP, has the company clearly ceased trading? And ideally the last dividend was taken some time earlier? If so, I don't think there's any issue here.

Key thing is so any third party looking at it can clearly distinguish between what was dividends taken whilst trading, and what was final funds being withdrawn as part of closure. The more these are blurred, the more risk of some you want to be treated one way being argued should be treated another.

[jamesbrown]

Indeed, the OP doesn't provide much information and their accountant is best placed to help with that, assuming they have one. In terms of the main question they raised, I wouldn't split the payments, personally. Perhaps Maslins can weigh in.

[Lance]

Agree with Lance. Take a dividend if you want it soon. Dividend tax is less than CGT, even with BADR, unless you're already a higher rate tax payer for the year. Otherwise, take a final capital distribution. I wouldn't try to break a capital distribution into two, personally. It is probably low risk, in the scheme of things, but it would most likely look like a dividend distribution if it were to be investigated.

Another one of my assumptions is a share split such that no CGT will be paid as the threshold won't be reached. But yeah, dividends may well be cheaper than capital and available immediately.

[jamesbrown]

Agree with Lance. Take a dividend if you want it soon. Dividend tax is less than CGT, even with BADR, unless you're already a higher rate tax payer for the year. Otherwise, take a final capital distribution. I wouldn't try to break a capital distribution into two, personally. It is probably low risk, in the scheme of things, but it would most likely look like a dividend distribution if it were to be investigated.

[northernladuk]

Lack of information and tulip bordering on incorrect advice. CUK gold this thread is

[Lance]

My guess is no because all the paperwork has to be submitted to HMRC, debts paid and then distribute the cash as a final dividend. You can't take two or more final dividends.


Point of the above being that the cash being paid is the last on the list.

But you are asking contractors on this forum, not company specialists or accountants so I'm only guessing here.

You can take dividends when you wish. If OP wants a capital distribution there will be no final dividend.
So OP can take a dividend, in advance of a strike off, if personal cash is needed (and there is sufficient retained profit). For that basis multiple transactions are fine. But I would assume they want to pay CGT not dividend tax.... but that assumption is based on lack of useful information.

[Peejay]

Perfect, that clarifies it for me, many thanks for taking the time.

[northernladuk]

My guess is no because all the paperwork has to be submitted to HMRC, debts paid and then distribute the cash as a final dividend. You can't take two or more final dividends.

Company accounts, tax return, payroll and VAT


You’ll have to prepare your company accounts to include the period from your last annual accounts to your final date of trading, together with your company tax return, and submit these to HMRC. This should also explain that you are dissolving the company and wish to terminate the corporation tax scheme for the registered company.

HMRC will issue a final P35 (employer’s annual return) form, which you should complete and return. Any outstanding PAYE liabilities (income tax and NICs) will have to be paid in full.

You’ll also have to tell HMRC that your company has ceased trading so it can be de-registered for VAT. They will send you a questionnaire to complete.

For most businesses, this will be quite straightforward but if your company holds stocks and assets such as computers, equipment, and office furniture, you may need help from your accountant to complete a VAT return.
Closing your bank account, final payments

Point of the above being that the cash being paid is the last on the list.

But you are asking contractors on this forum, not company specialists or accountants so I'm only guessing here.

[Peejay]

£9 is the bulk of £10, it's all relative.
All I'm asking is, if you're making a capital distribution when closing down a company, does it need to be shown as a single transaction?

[Lance]

We're in the process of striking off a business with two directors, there's only about £15k left in the business between us but I could do with getting access to at least some of my share ASAP even though we haven't quite finalised the remaining liabilities, though they'll be small.

Is there an issue with extracting the surplus in multiple transactions, i.e. bulk now, remainder just before finalisation, or will that raise any eyebrows/cause any issues down the line?

Thanks!

Paul

bulk????? What bulk is there of £15k FFS???
If you're doing a strike off I assume that there was less than £25k anyway. Or is there critical information missing?
What you ask makes little sense.

[Peejay]

We're in the process of striking off a business with two directors, there's only about £15k left in the business between us but I could do with getting access to at least some of my share ASAP even though we haven't quite finalised the remaining liabilities, though they'll be small.

Is there an issue with extracting the surplus in multiple transactions, i.e. bulk now, remainder just before finalisation, or will that raise any eyebrows/cause any issues down the line?

Thanks!

Paul