As most of us know, extra statutory concession C16 is on its last legs and will probably be replaced by legislation which (HMRC propose) will be exactly the same except that final distributions will only be taxed as capital gains if they are £4,000 or less. Apparently £4,000 is the typical cost to a small company of appointing a liquidator and going through a formal winding-up. Obviously they think that any company with more than that can afford to go down the liquidation route. It's also coincidentally the same amount that the Crown won't bother to chase if the share capital is re-paid.
Assuming this law goes through as proposed, it opens up an interesting possibility. Could it be worth accountants getting an insolvency license in order to specialise in those SMEs who will now be forced to wind-up rather than pay shedloads of tax on a final dividend?
I must confess, I don't know a lot about insolvency, but I assume there isn't much to it apart from a creditors meeting, advertising in the Gazette, drawing up a list of assets, chasing anyone who owes money, paying off the creditors and making sure no-one has taken money from the company illegally. For a sole owner/manager who just wants to get rid of his company and take the remaining cash as tax efficiently as possible, I would imagine this would be a straightforward process, almost a case of going through the motions.
Insolvency practitioners will charge an arm and a leg for this. We could do it for a fraction of the cost without too much work or risk for a one-man company. The only problem I can foresee is all those people who pay themselves illegal dividends, and what to do about them.
But what are the requirements for an insolvency license? Do you need any special qualifications? How much will the PII be? Would it be worth it just to cherry pick the easy jobs? There are bound to be loads of those so it sounds like a good opportunity to me. Would be interesting to know what others think, especially existing IPs.