Shuting Businesses To Claim Entrepreneur Tax Relief - Then reopen And Then

[SteveMcadden1]

Is there anything stopping you doing this?

Amass a 100k warchest - Shut business , claim tax relief and then open up a new one.

Is this legal?

[BrilloPad]

Is there anything stopping you doing this?

Amass a 100k warchest - Shut business , claim tax relief and then open up a new one.

Is this legal?

You need HMRC approval before doing so. IANAA but I believe that if they suspect you are taking the p1ss then they will refuse permission.

Why not pay most out in divs then take a bit as capital gains? Its why I always do : never been pulled up yet.

BP

[ChimpMaster]

Why not pay most out in divs then take a bit as capital gains? Its why I always do : never been pulled up yet.

BP

Do you mean by closing the Co down, or is there another way to take money out as capital gains whilst keeping the Co running?

[XLMonkey]

Is there anything stopping you doing this?

Amass a 100k warchest - Shut business , claim tax relief and then open up a new one.

Is this legal?

Nope, it isn't. (well, technically its in breach of the HMRC tax exemption rules, but on this one rare occasion, HMRC rules and legal amount to the same thing)

To get the tax relief, HMRC require you to write a letter confirming, amongst other things, that the business has ceased trading and that there is no prospect of the director(s) continuing in that trade. If you write this letter, but then set up a new company and continue trading, then they can 'ave you.

[chavvy]

Is this the same thing as shutting down a company and taking out the proceeds and thus attracting only 10% in CGT?

So for 100k, you pay 20% in corporation tax, shutdown the co. and pay a further 10% equating to about 72% in your pocket of the contract value and thats before any expenses.

I heard that there has not been any successful test cases against doing this.

[ratewhore]

Nope, it isn't. (well, technically its in breach of the HMRC tax exemption rules, but on this one rare occasion, HMRC rules and legal amount to the same thing)

To get the tax relief, HMRC require you to write a letter confirming, amongst other things, that the business has ceased trading and that there is no prospect of the director(s) continuing in that trade. If you write this letter, but then set up a new company and continue trading, then they can 'ave you.

I don't remember writing a letter saying that...

[Fred Bloggs]

I was advised by my accountant not to do the "phoenix business" type deal when I proposed closing down, going on a 3 or 4 month holiday and starting up again with a new Ltd Co on my return.

[Gonzo]

To get the tax relief, HMRC require you to write a letter confirming, amongst other things, that the business has ceased trading and that there is no prospect of the director(s) continuing in that trade. If you write this letter, but then set up a new company and continue trading, then they can 'ave you.

I don't remember writing a letter saying that...

Neither do I.

I had to write a letter saying that the company would not trade and pay all its taxes and creditors.

However, I have not been through the application for Entrepreneurs' Relief on the SA return yet so I am not at the end of the process.

[ratewhore]

Neither do I.

I had to write a letter saying that the company would not trade and pay all its taxes and creditors.

However, I have not been through the application for Entrepreneurs' Relief on the SA return yet so I am not at the end of the process.

I filled in the forms, got the relief, moved on. Now contracting under another business as I wanted to rebrand and relieve myself of the existing partner relationships etc etc etc.

No comeback, no problem. And that's a few years back.

That is my experience, fwiw!!

[Bengal]

......attracting only 10% in CGT?......

I think the CGT regime changed in April 2007. There is no longer taper relief and a flat rate of CGT which is 18% (still better than income tax).