ESC16 (tax-efficient way of closing ltd) might close soon, says AccountingWeb

[xoggoth]

Glad mine only has assets of about £200.

[Sockpuppet]

We will have to wait and see what, if anything is announced, keep an eye on Budget Day on 23rd March. If the funds are sufficiently large, you may still be able to gain the relief by having a formal winding up, but this is quite expensive so each case would need to be looked at on its own merits.

I see lots of people operating as specialist liquidators winding up companies for a nominal fee which could still be tax efficient.

[Nixon Williams]

This is an area that could be limited in the near future.

One suggestion is that the relief is limited to just £4,000, with the remainder being distributed via dividends and so taxable in the normal way.

The reason for the potential crack down is that in the view of HMRC there has been abuse of this concession. I can certainly recall some accountants suggesting to clients that they close down their company every two years and start a new one!

We will have to wait and see what, if anything is announced, keep an eye on Budget Day on 23rd March. If the funds are sufficiently large, you may still be able to gain the relief by having a formal winding up, but this is quite expensive so each case would need to be looked at on its own merits.

I think this is another reminder to very careful with long term tax planning, the tax rules that exist now may be very different when you attempt to extract cash etc.

Alan

[Clare@InTouch]

Some AccountingWeb content is restricted to non-registered users, so try here too:

ESC C16 to be Significantly Curtailed under Proposed Replacement Legislation | HMRC | Tax News

The consultation was issued back in December, so we're waiting to see how it develops.

[matzie]

FYI:

ESC C16 - tax concession on dissolving a company at risk

"if you are thinking of taking advantage of the current concession there is no time to lose as the opportunity may close as early as Budget day on 23 March."

I can't see any real meat on the bones of this story but if you're thinking of closing a company soon, this info might still be beneficial...