Taking money out of closed account

[rrp]

I have been back in full time employment for over a year now, during which time my limited company has not transacted at all, except for year end accounts.

The company is in the process of being closed down by companies house and I am urgently looking for advice on what to do with the residual money in the company.

I have around 30k in the company after my last accounts - there are 2 directors, my wife and myself with only myself working as a 40% tax payer.

So the question is.. What is the best advice to take out the money, pay the minimum tax obviously!!!

I have asked my accountant the same question and I am awaiting an answer - but often the responses on here are better anyway.

Thanks

Robert

[EternalOptimist]

Hi Bob

you need a 'safe pair of hands'. I will do some work for you, like give this advice, then invoice you for 30k.
In a years time we meet in a motorway service station and I give you a carrier bag full of your money minus £100



Who shall I send the invoice to ?

[BrilloPad]

Hi Bob

you need a 'safe pair of hands'. I will do some work for you, like give this advice, then invoice you for 30k.
In a years time we meet in a motorway service station and I give you a carrier bag full of your money minus £100



Who shall I send the invoice to ?

I will do it for £99....

[Gonzo]

It is not possible to advise you without knowing all the details of your financial situation, however one thing that your Accountant might suggest is applying to HMRC for ESC 16 to be applied, which would then allow you to take all the remaining money as a Capital Distribution and it would be subject to Capital Gains Tax, not Income Tax.

It is likely that a Capital Gain would be subject to less tax than Income, but that does depend on your circumstances.

Usual disclaimer: IANAA etc

[rrp]

Sounds like Capital Distribution is an option then. I will prompt my accountant....

[pmeswani]

I will do it for £99....

You penny pincher... I'll do it for £98.99

[ams]

Is ESC 16 the same thing as Entrepreneurs Relief?

My partner and I have both closed down our Ltd companies recently to merge to a single entity, and both of us claimed Entrepreneurs Relief on the disposal of the 2 businesses.

http://www.hmrc.gov.uk/cgt/businesses/reliefs.htm#1

"Entrepreneurs’ Relief reduces the amount of gains liable to Capital Gains Tax by four ninths, resulting in an effective 10 per cent rate on all qualifying gains up to £1 million."

If it's not the same thing as ESC 16, then perhaps it can be claimed in conjunction?

[max]

Taking money out of closed account

If the account is closed you'll need to go the high court to get the cash out.

[Gonzo]

Is ESC 16 the same thing as Entrepreneurs Relief?
<snip>

If it's not the same thing as ESC 16, then perhaps it can be claimed in conjunction?

Not quite.

ESC16 means HMRC allow you to withdraw the funds from a business that you are closing and treat the money as a capital distribution. This saves you the expense of a formal winding up.

The entrepreneur's relief is the bugger's muddle that allows £1,000,000 of capital gains when businesses are sold or closed to be taxed more lightly than other capital gains.

[mossman]

When a company is closed I believe that any company assets become the property of the crown, including presumably any money in the company bank account. So whatever you do, do it quickly. Possibly put the closure on hold until you've taken some professional advice and decided what to do. You don't say why you want to close the company. Might be worth keeping it alive until the next tax year or beyond, paying wife a small salary for admin until money used up, without any tax liabilty?