Company Strike Off + Capital Gains Tax confusion

[northernladuk]

Re: point 2) You will be paying CGT on the retained earnings (RE) not the remaining cash in the bank account.

If RE is less than £25k then automatically treated as capital distribution.

If RE is more than >£25 then need to formally liquidate the company and use insolvency practioner - usually costs c.£4k.

Probably best to confirm situation with your EX-accountant.

Andrew

FTFY to reflect the OP's situation.

[Andrew@Wisteria]

FTFY to reflect the OP's situation.

Thanks NLUK! I'm sure they would be happy to clarify via a quick phone call (hopefully some relationship still there!)

Otherwise take the closing RE per the final accounts!

[Maslins]

Re: point 2) You will be paying CGT on the retained earnings (RE) not the remaining cash in the bank account.

If RE is less than £25k then automatically treated as capital distribution.

If RE is more than >£25 then need to formally liquidate the company and use insolvency practioner - usually costs c.£4k.

Probably best to confirm situation with your accountant.

Andrew

Bold bit above was more my concern. Company was closed down after ESC C16 went out the window. Therefore as it sounds like net assets were £40k, and the company was struck off rather than liquidated, entrepreneurs relief doesn't even come into it as that only applies to CGT. In this instance I'd expect all the funds to be taxed as dividends.

To the OP, I'm afraid as others have said, too late for much in the way of tax planning now. Your options should have been discussed before you closed the company. Reality is in this case probably not too much harm done.

[stek]

Company Strike Off + Capital Gains Tax confusion

Bold bit above was more my concern. Company was closed down after ESC C16 went out the window. Therefore as it sounds like net assets were £40k, and the company was struck off rather than liquidated, entrepreneurs relief doesn't even come into it as that only applies to CGT. In this instance I'd expect all the funds to be taxed as dividends.

To the OP, I'm afraid as others have said, too late for much in the way of tax planning now. Your options should have been discussed before you closed the company. Reality is in this case probably not too much harm done.

Where's the schadenfreude in that??!!

[MrsKay]

Hi,

I am sorry,This isn't my area of expertise, that's why I am even more confused.

The only outgoing incurred after the last contract was Accountancy Fees, company domain (website/emails) fees, and monthly bank charges.

My accountant advised me this is the most effective way to shut down the company - apply to strike off, and distribute the gains, and pay Capital Gains Tax.

My accountant sent me a set of document templates to be sent to relevant organisations including HMRC, Companies House, bank etc.
In his email he mentioned some of the documents must Only be sent after the accounts are finalised.
But I made a mistake by sending the HMRC letter too soon. I told my accountant about this and he said I should phone HMRC and explained (that I should only send the letter after the accounts are finalised), which I did.
HMRC helpline couldn't answer this question, but someone from HMRC called me back. He said he didn't agree with my accountant because I have paid all my taxes and the company has not traded since and I am free to close the company down. Companies House also agreed that I can close the company any time.

I naturally told my accountant what HMRC and Companies House had informed me and asked them to double check.
I have not heard from them since... this was back in February.

I guess there is not much I can do now, just have to pay more tax in 2014.

Thanks,
MrsKay

[MrsKay]

Otherwise take the closing RE per the final accounts!

Hi Andrew, RE is 50000. Cash about 45000.
When I complete my Self Assessment, should I put it down as dividend, and if it is dividend, should it be 50000 or 45000?

Thanks,
MrsKay

[Nixon Williams]

Hi Andrew, RE is 50000. Cash about 45000.
When I complete my Self Assessment, should I put it down as dividend, and if it is dividend, should it be 50000 or 45000?

Thanks,
MrsKay

If you are asking questions of this nature, I would strongly recommend that you speak to your accountant or seek advice from one who can see the full picture.

I would be wary of giving advice to you with the limited information you have provioded so far.

Alan

[northernladuk]

Find yourself another accountant. You have got yourself in a right mess so it is time to get some professional advice. You could be throwing money down the drain trying to do this yourself and asking for advice on a free forum. Our accountant guys are top notch but they don't know your full circumstances.

Could be the best couple of hundred quid you spend so get one now.