Entrepreneur Relief vs Liquidation vs Loan

[RockyBalboa]

Has anyone actually gone through MVL? If so, what was your experience?

[Maslins]

ER does still exist, though one of the conditions for qualifying is owning the shares at least 1 year, unclear whether you've met that or not.

Transactions in securities rules can catch you out if you're basically repeatedly closing a company to get cash out tax efficiently then starting up Newco doing exactly the same thing. See here for a bit more info.

As it sounds like you'll be staying in the UK for another year or so, I'd suggest you'd be ok closing down your company then...but if you shut one down a year ago, shut this one down now, then start a third one which you shut down in 12 months time, you're very much pushing your luck.

[panadol]

so to clarify, you had a previous LTD company which you shut down to avoid tax, then set up a phoenix company which you now want to shut down to avoid more tax on the money you are sending abroad?

I really hope hector catches you, i actually really do.

ER wasn't the reason why I shut down the last company. I was closing the company anyway for other reasons, and then learnt about about ER. Was suggested to sort out my accounts before a certain date.

As for moving money abroad as I am planning moving country in the next 12-18 months and need to get prepared with a property ahead of the move. Hence was looking at director loans as an possible option.

Would not try to avoid tax but to find out the efficient way given my situation and to avoid unnecessary complications.

[northernladuk]

I think you'll find it was ESC C16 that was changed to have a limit of £30K in March. ER is still in place.

Quite right thank you. I don't know what I put that. I even googled ESC C16 to find the date!

[Ketchup]

Thanks for the sugestions!
Is ER still around. Previous posts suggested that it have ended? (which was why I claimed ER for my last company before the scheme ended)

so to clarify, you had a previous LTD company which you shut down to avoid tax, then set up a phoenix company which you now want to shut down to avoid more tax on the money you are sending abroad?

I really hope hector catches you, i actually really do.

[panadol]

(1) Yes, you can claim ER many times so long as your company meets the qualifying conditions. There is a lifetime limit of £10m;
(2) If closing your company is purely tax motivated, then yes, it is suspicious and illegal. If you have a genuine business reason for closing it down (moving onto new ventures, business risks from previous work done etc) then the motivation for closing is not related to reducing your tax bill, and is OK;
(3) A directors loan would (in my opinion) be a strong option, if (2) above doesn't work out. Just we wary of cashflow issues surrounding payment of your S455 tax - ask your accountant to prepare an illustration of this;
(4) Pay a dividend would be your last option is everything else above was untenable for you;

Hope that helps, and good luck!

Thanks for the sugestions!
Is ER still around. Previous posts suggested that it have ended? (which was why I claimed ER for my last company before the scheme ended)

[Lewis]

ER which ended in March 2012

I think you'll find it was ESC C16 that was changed to have a limit of £30K in March. ER is still in place.

[Ketchup]

So to clarify, you want to take money out of a UK LTD company to buy a property abroad (India?).

As a UK company owner, i think it is your duty to see the effect that this has on the UK economy and the detrimental effect former internationals sendign money back "home" has.

[Greg@CapitalCity]

Can I claim ER again? My accountant suggested liquidating the company.

My concern is if it'd look suspicious to HMRC that I closed a company down after 12 months of the last one.

Or should I get a director loan, and claim ER another year later?

Or I could pay dividend tax and continue with the same ltd company.

(1) Yes, you can claim ER many times so long as your company meets the qualifying conditions. There is a lifetime limit of £10m;
(2) If closing your company is purely tax motivated, then yes, it is suspicious and illegal. If you have a genuine business reason for closing it down (moving onto new ventures, business risks from previous work done etc) then the motivation for closing is not related to reducing your tax bill, and is OK;
(3) A directors loan would (in my opinion) be a strong option, if (2) above doesn't work out. Just we wary of cashflow issues surrounding payment of your S455 tax - ask your accountant to prepare an illustration of this;
(4) Pay a dividend would be your last option is everything else above was untenable for you;

Hope that helps, and good luck!

[panadol]

Did you get your Skilled Migrant Visa in the end or are you way past that now?

Got my HSMP, Tier 1, and now on indefinite leave ) Looking forward to neutralisation. Oops, another few grand. Need to draw money out from ltd!

[panadol]

I hope you mean most of the profits from your company! I am sure you do!

We did liquidation a few times already and a search will help. Alan from Nixon Williams has done it from some clients and posted some interesting stuff. I believe it isn't really worth it under something like 30k and will cost around £3k to do it now so not the great option it used to be under ER which ended in March 2012 (so you can't do that now).

....

Have you really got enough in the business in a year to be looking at these options though? I can't keep my warchest topped up some years let alone have enough to consider closing the company!

Yes, extracting profits. Putting the money together my personal cash, I'd be in a position to put down a deposit for some lucrative investment abroad.

No ER, so that leaves it to dividend payout.

Already planned to extract dividend to about £30k per year (lowest band). I was referring to the next band (32.5%?), minus 10% tax credit that means 22.5% of every dollar dividend above threshold.

I assume my accountant did some rough math, and that the liquidation option would save me some money. Possibly a trade of with risk. Hence wanting to find out if anyone had been in similar situation?

[northernladuk]

Did you get your Skilled Migrant Visa in the end or are you way past that now?

[northernladuk]

I hope you mean most of the profits from your company! I am sure you do!

We did liquidation a few times already and a search will help. Alan from Nixon Williams has done it from some clients and posted some interesting stuff. I believe it isn't really worth it under something like 30k and will cost around £3k to do it now so not the great option it used to be under ER which ended in March 2012 (so you can't do that now).

Am wondering why you are asking on here when you have already asked the guy you pay for professional advise on your personal situation. Did he not give you the answer you wanted to hear?

Dividend tax? You mean the normal taxes on divis over the lower threshold?

There is always a warning about phoenixing when closing down companies to make use of tax relief. There is a comment about this in an article on CUK below. Its from 2011 though. IT Contractors Questions: How to draw money out of a limited company? :: Contractor UK

Oddly enough I didn't think closing a company to make use of tax breaks was phoenixing in the true sense but seems to be the term being used.

Bearing in mind you are using this method to reduce tax I would say they would be quite within their right for them to be interested in your activities so close to the last one but guess it's down to risk attitude I guess.

Have you really got enough in the business in a year to be looking at these options though? I can't keep my warchest topped up some years let alone have enough to consider closing the company!

[panadol]

I am looking to purchase a property abroad and required to extract most of funds from my limited company for the deposit.

I used to have another limited company which I closed and claimed ER a year ago (retrospectively, I should have not closed it!)

Can I claim ER again? My accountant suggested liquidating the company.

My concern is if it'd look suspicious to HMRC that I closed a company down after 12 months of the last one.

Or should I get a director loan, and claim ER another year later?

Or I could pay dividend tax and continue with the same ltd company.

Which is the usually the best option?

Thanks.