Capital Gains Tax / Enterpreneur Relief - Stopping after 2 years

[candy]

I've made around £100k in the first year and £60k in the second year, there estimates are probably off by quiet a bit.

But I've paid myself a small salary and a dividend.

Now that I'm closing my company... wouldn't it be better to replace the dividends by loans so that I pay capital gains tax with entrepreneur relief on that part instead of dividend tax?

I can still delete my dividends in the online user interface, just wondering if it would safe me money doing it that way.

[jamesbrown]

Good luck explaining those "director's loans" Put it this way, I wouldn't want to be you, under investigation.

But, the short answer is "yes", you might've been better off, had you met the requirements for a capital distribution (TiS) and for the ER rate of CGT. Note that you can no longer take a capital distribution if you plan to engage in the same or a similar trade or activity within two years of closure. Permanent employment is thought to be OK.

Anyway, all of this is hypothetical. You've made the dividend payments. You won't be able to prove they weren't dividend payments. Too late.

[candy]

But that's the point...

The NWV web ui allows removing dividends and reassigning them as director loans, with 1 ciick of a button.

I'm just wondering up to what point CGT tax + entrepreneur relief tax will be lower than paying plain dividend tax.

[SueEllen]

But that's the point...

The NWV web ui allows removing dividends and reassigning them as director loans, with 1 ciick of a button.

I'm just wondering up to what point CGT tax + entrepreneur relief tax will be lower than paying plain dividend tax.

You will have declared accounts for year one, and possibly year two with Companies House and paid the appropriate corp tax with HMRC.

This means if you suddenly turn round and say the dividends were loans not only will your accountant and liquidator refuse to deal with you unless they are equally dodgy, HMRC will be interested in your affairs.

[jamesbrown]

But that's the point...

The NWV web ui allows removing dividends and reassigning them as director loans, with 1 ciick of a button.

I'm just wondering up to what point CGT tax + entrepreneur relief tax will be lower than paying plain dividend tax.

It doesn't matter what little story you can spin through your "web ui", if you've prepared the dividend paperwork and paid these dividends from your company bank account, there's a permanent record. You can destroy the paperwork and try to argue whatever you'd like about the payments, retrospectively. I wouldn't fancy your chances in the event that they're queried. You have no proof, and there may be records of your "clicks". Also, bear in mind that you're in evasion territory, not avoidance. Afterall, you're proposing to destroy and then fake legal documentation. If you're going to make a loan, you'd better have the minutes and the resolution (a legal requirement for loans over 10k). Also, if we're talking about previous years, then this clearly isn't going to work. I don't think your accountant approves What do they suggest?

My advice: learn the lesson, and plan better in future.

[Darren at Fox-Bartfield]

Dividends

Have you spoken to your accountants?

Presume you've filed your last year's self assessment and accounts with HMRC? Also, paid higher rate on your dividends?

[Lance]

But that's the point...

The NWV web ui allows you to commit fraud with 1 ciick of a button.

FTFY

[northernladuk]

Ignore everyone giving you you proper advice you don't want to hear. Sounds good, go for it.

P. S. What are you going to be doing once you've shut the company?