Reply to: Closing ltd company, questions regarding capital distribution and CGT

[Alan @ BroomeAffinity]

my ex-accountant .

Sounds like a plan

[Crossroads]

I was misinformed. I was in the process of applying for ESC-C16 in March, my ex-accountant stated that in the new tax year, this will not be required.

Sorry for any confusion.

Your accountant is STILL wrong. ESC C16 has NOTHING to do with the changes to CGT.

[eazy]

Stand Corrected!

I was misinformed. I was in the process of applying for ESC-C16 in March, my ex-accountant stated that in the new tax year, this will not be required.

Sorry for any confusion.

[Crossroads]

The PCG are correct. Your accountant is wrong.

Seconded. ESC-C16 is about being granted the concession of taking the profits as capital rather than income.

[downinja]

The PCG are correct. Your accountant is wrong.

Ok, thanks. That was my suspicion (!)

[THEPUMA]

Do you happen to have a link to somewhere that confirms this? Only I've been getting conflicting information - my accountant says that ESC-C16 no longer applies since BATR has been abolished, but the PCG Tax Helpline advise that ESC-C16 and BATR were completely separate issues. Isn't the default position that on closing the company any profit would be treated as a final dividend - in which case, some kind of application would presumably need to be made to get it treated as CGT instead?

If, for instance, it turns out that I do not qualify for Entrepreneur's Relief, then wouldn't I still need C16 to pay tax at 18%? This seems to be implied by http://www.egos.co.uk/extracting_retained_profits.htm

The PCG are correct. Your accountant is wrong.

[downinja]

Concession Request for ESC C16 is no longer required since the new tax year

Do you happen to have a link to somewhere that confirms this? Only I've been getting conflicting information - my accountant says that ESC-C16 no longer applies since BATR has been abolished, but the PCG Tax Helpline advise that ESC-C16 and BATR were completely separate issues. Isn't the default position that on closing the company any profit would be treated as a final dividend - in which case, some kind of application would presumably need to be made to get it treated as CGT instead?

If, for instance, it turns out that I do not qualify for Entrepreneur's Relief, then wouldn't I still need C16 to pay tax at 18%? This seems to be implied by http://www.egos.co.uk/extracting_retained_profits.htm

[THEPUMA]

Easily achievable.

[AMPM]

I'll go back to my original question

"Accountant told me that they'd prepare the accounts, company will pay the CGT and remaining VAT and then I can get the money out of the company bank account. This whole thing can be done in one month."

Is it possible to take the money as capital gains in 1 months or is too short time?

[Moscow Mule]

another stupid question do you get any capital gains relief before you pay the 10 per cent tax or do you have to pay the 10 per cent on everything.

Plus if your above 40 per cent threshold HMRC won't ask for any extra money on the payment you have made for the capital gains. Is that correct.
Apologies but find this whole process confusing.

There are no stupid questions, but the answer to most of yours can be found here...

http://www.hmrc.gov.uk/cgt/index.htm

[AZZIK]

another stupid question do you get any capital gains relief before you pay the 10 per cent tax or do you have to pay the 10 per cent on everything.

Plus if your above 40 per cent threshold HMRC won't ask for any extra money on the payment you have made for the capital gains. Is that correct.
Apologies but find this whole process confusing.

[eazy]

It?

The rules are for all businesses including IT. I am not in IT, but in Engineering and am in the process of closing my Ltd company using the CSC C16 concession, which I requested & obtained from HMRC in early March before the new regime kicked-in.

[AMPM]

Concession Request for ESC C16 is no longer required since the new tax year. 75% BATR has been abolished and been replaced by new CGT regime.

Now you pay CGT at 18% flat rate. However, entrepreneur's relief is available for for 1st 1Million (accummulative). This means you pay 10% CGT.

Any idea if any IT contractor has actually availed this entrepreneur's relief to pay 10% CGT? Does it apply to IT contractors?

[eazy]

No Income tax is payable

No Income tax is payable as you declare the money taken from company closure in the self assessment CGT section and pay the amount due.

[munglefish]

When you have closed the company and taken your funds out though - if you have taken a nice big wedge out does that get counted as income and catapult you over the 40% threshold so additional tax is incurred? Or is this not deemed an income? Apologies if a daft question bit its something that I always get confused on....