Dissolving a company – tax implications

[level]

Thanks for all your help ASB

[ASB]

Another question I have is about the 2 year period for the full 75% taper relief.

Some of the money in the company when it closes will have been received only recently. Does this mean that I have to work out exactly how much time the different amounts of money have been in the account and then apply differing rates of taper relief to retained profits held less than 2 year?

This seems like it would be very complicated. Could it be that all retained profit, whenever received, gets the 75% reduction because the company issued its share capital 5 years ago?

My understanding is that the taper relief is available because of the length of ownership of the asset, not when the income was generated. Of course that doesn't make me right. A quick call to the companys tax office may help.

[level]

Another question I have is about the 2 year period for the full 75% taper relief.

Some of the money in the company when it closes will have been received only recently. Does this mean that I have to work out exactly how much time the different amounts of money have been in the account and then apply differing rates of taper relief to retained profits held less than 2 year?

This seems like it would be very complicated. Could it be that all retained profit, whenever received, gets the 75% reduction because the company issued its share capital 5 years ago?

[ASB]

Thanks for those threads.

Am I right in thinking that it's better to draw out cash up to the higher rate as dividend then take the remainder as capital?

That would be my view because there is no further tax to pay on the divi keeping beneath the higher rate threshold, this then reduces the capital distribution and consequently any amount that may be chargeable to CGT.

Of course ensuring there are no other capital gains in the year in question is necessary, otherwise that will impact the amount of CGT that is paid.

[level]

Thanks for those threads.

Am I right in thinking that it's better to draw out cash up to the higher rate as dividend then take the remainder as capital?

[ASB]

Thanks for this... I'll have another look in the forum. Already found some stuff but there seems to be a real lack of info on the internet as a whole.

Did you get the 75% taper relief? Is this really as good as it looks? It's not that usual for HMRC to give contractors a break.

Yes, trouble with searching is ESC and C16 are too short. But, I turned up http://forums.contractoruk.com/threa...oncession.html

and

http://forums.contractoruk.com/threa...oncession.html

This might help with the wording

http://forums.contractoruk.com/threa...inding-up.html

I recall posting up the text of the letter I used, but it was pretty much the same as the others and I cant find it again.

[level]

Thanks for this... I'll have another look in the forum. Already found some stuff but there seems to be a real lack of info on the internet as a whole.

Did you get the 75% taper relief? Is this really as good as it looks? It's not that usual for HMRC to give contractors a break.

[ASB]

What case is that ASB?

Keyboard playing up again. Cash was the word.

I had no problems, wrote to tax office say "can I have it" basically. The HMRC website give details of the undertakings you need to give (basically to pay outstanding CT and get the company struck off and ensure the cash iis declared on the sdhareholders personal tax returns and any relevant CGT paid.

Good luck.

[level]

What case is that ASB?

[level]

Too busy to change!
We've been meaning to get rid of her for a while. We'll get a new accountant when we start the new company.

[ASB]

Our current accountant isn't very good. I had to tell her about C16. I'm thinking it might be a bit too much trouble to get a new accountant just to close down the company.

I'm happy to give it a go myself if people can point me in the right direction. I'm a solicitor... not tax, but I'm happy to look into these matters.

If you search for it you should find it, I seem to remember I posted up how I did it. Make BLOODY sure get everything inm the right order though. Get the case out of the accounts before dissolution or you are well stuffed.

[malvolio]

SJD describe a company closure process as one of the alternatives solutions to saving tax. Perhaps you could drop SJD an email. There are some pitfalls you would like to avoid. (And to be fair, no doubt Nixon Williams and Darren could answer the question)

As an aside, why do people use accountants that can't answer basic questions (well, basic for accountants, anyway)? Its like using a dentist that can't do fillings.

[level]

Our current accountant isn't very good. I had to tell her about C16. I'm thinking it might be a bit too much trouble to get a new accountant just to close down the company.

I'm happy to give it a go myself if people can point me in the right direction. I'm a solicitor... not tax, but I'm happy to look into these matters.

[Sockpuppet]

I'd speakto an accountant with that kind of cash floating around.

[level]

I'm the secretary for a 2 person IT consultancy company. One of the directors is going permanent. The other director is thinking of waiting until the end of his current contract before dissolving the company and starting up a new one with someone with a similar skills set. The main issue is how to get the money out of the company in the most tax efficient way. Over the 5 years the company has been around nearly £200,000 has built up in the company account. So...
1. What is the most tax efficient way of getting the money out? I've read about Extra Statutory Concession C16. This seems too good to be true - If you can treat the cash in the company as capital and claim 75% taper relief this seems like a massive saving vs taking the lot as dividends.
2. If this is the best way to go, what is the timing for the procedure?

The cash in the company is pretty much all retained profit. The company has no tangible assets.

Many thanks