Capital Gain Tax - Please advise

[THEPUMA]

I am sure you can retro-apply for ESC C16. I think we did it once when we inherited a client whose accountant hadn't done it properly and they allowed it.

PUMA

[Clare@InTouch]

I presume you put TRY as it is a last ditch attempt but surely he has to get approval before end of Jan of which is has Bob Hope and also if he gets it Jan his banking says other wise so is wide open to investigation and a fair cop? Surely it is too late for this?

Probably, but it's worth a punt as the tax at stake is presumably quite a lot. If the accounts show a capital distribution and all that's missing was the ESC application then he has a better chance than if the accounts were prepared and submitted on the basis of the final money being a dividend (in which case the accounts would need to be amended, re-filed at HMRC & Companies House, and they are more likely to disagree).

It takes HMRC about a month to reply to ESC letters at the moment, depending on which tax office you apply to.

The expected changes to the ESC could also kick in at any time.

I'd be reviewing engagement letters and emails from the accountant if I were the OP, just to establish if there's any scope for a professional indemnity claim should the worst happen.

[northernladuk]

Just out of interest, is this a well known accountant,or a mate with some knowledge of accounting? there seem to be a few stories around of getting bad advice from accountants at the moment, one reason why I am happy sticking with my well known contractor specialist accountancy co. It's well worth the money

The OP did ask for accountant recommendations back in 2008 in the link below and NW was most recommended. Problem is Upton's was as well lol...

http://forums.contractoruk.com/accou...nt-needed.html

If it's a capital distribution then the accountant has just forgotten to apply for the ESC which you could TRY to do now.

I presume you put TRY as it is a last ditch attempt but surely he has to get approval before end of Jan of which is has Bob Hope and also if he gets it Jan his banking says other wise so is wide open to investigation and a fair cop? Surely it is too late for this?

[JoJoGabor]

Just out of interest, is this a well known accountant,or a mate with some knowledge of accounting? there seem to be a few stories around of getting bad advice from accountants at the moment, one reason why I am happy sticking with my well known contractor specialist accountancy co. It's well worth the money

[Clare@InTouch]

Hi,

I had closed the business in Oct 2010 and had considerable net profit extracted out of business.

I was expecting to pay capital gain tax on this amount shared between me and my partner, paying 10% after entrepreneur relief factored in.

My accountant had not filed for ESC C16. ( this somethign I was not aware of).

Does that mean I will have to pay higher rate tax, or declaring the net proceeds as capital gain on the tax returns for 2010-2011 will be enough ?

What is divident tax rate if I end up that route?

Please advise. I am scared like hell at the moment.

Thanks

What do your accounts show - a large final dividend or capital distribution? It'll be in the notes or on the bottom of the P&L. If it's dividend in the accounts then that's how it would be declared on your tax return. If it's a capital distribution then the accountant has just forgotten to apply for the ESC which you could TRY to do now.

Have the accounts been filed at HMRC and Companies House?

If the dividends are all higher rate then you're looking at 25% tax on the net value, unless you go into additional rates in which case it's slightly higher.

[ChimpMaster]

I would imagine worst case to be able top declare the funds under dividend status. Seeing as you closed the Ltd in Oct 2010, the Tax Return for this is due in Jan 2012 (online).

Of course, you would need to have the dividend voucher and meeting notes produced and signed (and probably dated appropriately).

Though as a measure I would seek to find out WTF your accountant was thinking. Perhaps he can retro-apply for ESC16, but if not then report him to the governing body and seek damages.

[northernladuk]

I did ask the accountant then. But was not advise on filling the ESC.
Declaring it as Capital gain on tax assessment now is not enough ? Can i file ESC now ?

You should be on the phone to your accountant first thing tomorrow really.

[manish12_79]

Well if you have taken the money out without issuing a dividend voucher you have paid yourself an illegal dividend which I believe will be counted as PAYE. See how THAT scares you. Can't see how you can call it capital gains without ESC.

You could of course fill the divi paperwork in now but IANAA.

Did he forget to put the ESC in or did you no ask him to?

Why did you assume you could only pay capital gains on it when you pulled it all out without doing anything about it. Did you not ASK your account first as that is what he is paid for??

Have you not asked him now? It is his job to advise you on such issues.

I did ask the accountant then. But was not advise on filling the ESC.
Declaring it as Capital gain on tax assessment now is not enough ? Can I file ESC C16 now ?

[Billy Pilgrim]

Can you not take your accountant to the cleaners for negligence ?

I dunno - just putting it out to the forum

How much will / could it cost you ?????

[northernladuk]

Well if you have taken the money out without issuing a dividend voucher you have paid yourself an illegal dividend which I believe will be counted as PAYE. See how THAT scares you. Can't see how you can call it capital gains without ESC.

You could of course fill the divi paperwork in now but IANAA.

Did he forget to put the ESC in or did you no ask him to?

Why did you assume you could only pay capital gains on it when you pulled it all out without doing anything about it. Did you not ASK your account first as that is what he is paid for??

Have you not asked him now? It is his job to advise you on such issues.

[Waldorf]

My understanding is that you do need to apply for the ESC C16 although I have been told by my accountant that this may disappear soon.

BTW - dividend are spelt with a "d" at the end, not a "t"

[manish12_79]

Hi,

I had closed the business in Oct 2010 and had considerable net profit extracted out of business.

I was expecting to pay capital gain tax on this amount shared between me and my partner, paying 10% after entrepreneur relief factored in.

My accountant had not filed for ESC C16. ( this somethign I was not aware of).

Does that mean I will have to pay higher rate tax, or declaring the net proceeds as capital gain on the tax returns for 2010-2011 will be enough ?

What is divident tax rate if I end up that route?

Please advise. I am scared like hell at the moment.

Thanks