Personal Tax after company closed

[Crossroads]

Stuff about ESC C16 & CGT

That was pre budget though, now it's a flat 18% (or 10% for the first £1m).

To the OP:

1. You cannot apply for ESC C16 as your company has been closed.
2. As already stated you do not "apply" for a dividend voucher, you produce the paperwork at the same time as paying the dividend. If you didn't do this, then the income should be classed as PAYE and taxed accordingly.

So "find" the dividend voucher or declare the income on your SA as salary and be prepared for HMRC to come after unpaid employers NI too...

Finally, GO AND SPEAK TO YOUR OLD ACCOUNTANT!

[TheFaQQer]

You don't "apply" for a dividend voucher. It is something your company produces whenever it pays a dividend. If you haven't produced a dividend voucher then you didn't pay a dividend. (Though I'm sure it's not entirely unknown for them to be produced after the event).

True, but I doubt that they are produced and accounted for once the company has been closed down and the paperwork completed for the company!

[ASB]

Can i apply for ESC C16 or dividend voucher now? which is the best one to go that would save me money. ESC 16 sounds better as it gives more rebate

Pls advise

ESC16 does not necessarily give more rebate. It depends on the taper relief you personally would get (though if you were trading for > 2 years you would most likely get 75% taper relief). See page 68 you have to get clearance before the event.

http://www.hmrc.gov.uk/specialist/esc.pdf.

Have you actually got the point where you have applied to companies house for dissolution under the relevant section; if so it is too late.

You don't "apply" for a dividend voucher. It is something your company produces whenever it pays a dividend. If you haven't produced a dividend voucher then you didn't pay a dividend. (Though I'm sure it's not entirely unknown for them to be produced after the event).

Edit:

This might give you some idea of how taper relief might apply to your particular situation. Obviously you idea would be to reduce the chargeable gain from 26,900 (i.e. the final capital distribution less the original paid up share capital) to 9,000.

http://www.taxationweb.co.uk/1-minut...er-relief.html

[bijuv]

You need to find that dividend voucher...(and 25% of the sum that will be going to HMRC)

Can i apply for ESC C16 or dividend voucher now? which is the best one to go that would save me money. ESC 16 sounds better as it gives more rebate

Pls advise

[ASB]

I don't want to enter figures on the self assessment form and end-up paying lots of tax. Pls advise as the best possible solution.

Well just don't bother then. Hope for the best.

Alternatively ask the accountant what he did, and what you need to do; clearly there are elements which you do not yet understand.

[TheFaQQer]

You need to find that dividend voucher...(and 25% of the sum that will be going to HMRC)

Wouldn't it need to have been included with the closing accounts that would have been filed with companies house?

IANAA so have no idea how it works.

[Crossroads]

You need to find that dividend voucher...(and 25% of the sum that will be going to HMRC)

[bijuv]

You need to speak to your old accountant and / or check your final accounts as these will detail how the funds were distributed.

Did you apply for ESC C16?
Do you have dividend vouchers for this income?
Did it feature as salary on your final P45?

The answer should be yes to one of the three above, which will then dictate what liability you will have.

Looking at all the feedback from all the users here, i feel bit cheated as my accountant didn't mention anything. They just charged me for everything and didn't do a proper job in closing the company.

Did you apply for ESC C16?
I have not applied for any ESC C16.

Do you have dividend vouchers for this income?
nor did i have any dividend vouchers

Did it feature as salary on your final P45?
Also its not mentioned on my P45

I only realised about the whole issue when i was doing my self assessment.

I don't want to enter figures on the self assessment form and end-up paying lots of tax. Pls advise as the best possible solution.

Any advise/help would be really appreciated.

Thanks

[TheFaQQer]

I did not do any business in that yr and hence had to close it as i took a permanent job.

FWIW, that's not correct - just because you did no business in the year does not mean that you had to close the company down.

[ASB]

If you applied for and got ESC16 then it is treated as a capital dirstribution. In this case you have a 27k capital gain, knock off your 9k allowance and this leaves 18k chargeable at your highest marginal tax rate (probably 40%) resulting in a tax bill of some 7.2k. It's down to you to put it on your tax return.

Depending upon the length of time trading and your specific tading details then you may get some taper relief. This can cause the 27k to be reduced for tax purposes. Certainly down to a level where no tax is payable on these figures.

If you went through a formal liquidation (doubtful) then it is likely treated as above.

If it was paid as a dividend then it is treated as any other dividend. Given you would appear to be a higher rate tax payer this means you will have to pay tax of 25% of the portion of the dividend in the higher rate band. Again it's down to you to get your tax return right.

If it was a bonus or similar then it should have been treated as any other salary payment.

You really need to check with your accountant how it was done.

[Crossroads]

My accountant told me to withdraw the remaining balance after the company was closed. I did not do any business in that yr and hence had to close it as i took a permanent job.

I didn't have any capital investment in the company so would this be treated as a dividend/bonus.

The Million dollar question is Do i have to pay tax on this amt? It would go more than 40% if i add my salary on top of it.

Also looking at the financial status, i wonder i can manage a loan to pay the tax.

pls advise

You need to speak to your old accountant and / or check your final accounts as these will detail how the funds were distributed.

Did you apply for ESC C16?
Do you have dividend vouchers for this income?
Did it feature as salary on your final P45?

The answer should be yes to one of the three above, which will then dictate what liability you will have.

[bijuv]

It's taxable under whatever regime it was taken in. You give no indication of this. It could be dividend income, it could be capital, it could be viewed as a bonus. Just depends what you did and how you did it.

My accountant told me to withdraw the remaining balance after the company was closed. I did not do any business in that yr and hence had to close it as i took a permanent job.

I didn't have any capital investment in the company so would this be treated as a dividend/bonus.

The Million dollar question is Do i have to pay tax on this amt? It would go more than 40% if i add my salary on top of it.

Also looking at the financial status, i wonder i can manage a loan to pay the tax.

pls advise

[bijuv]

I just withdrawed it after my accountant said that the company has been closed and i can withdraw the money left in the company account.

so what would this amt be treated as?

[ASB]

It's taxable under whatever regime it was taken in. You give no indication of this. It could be dividend income, it could be capital, it could be viewed as a bonus. Just depends what you did and how you did it.

[bijuv]

All,

After contracting for 2 yrs, I closed my limited company in Jul 2007 and took on a permanent job. After closing my company i received around 27K from the company account after paying all the tax ( i.e corporation tax etc)

Now its time to file my tax return. In the year 2007-2008 i received around
36K as salary. do i have to pay tax on the 27K i received by closing the company account?

Pls advise.

Thanks
Biju