Winding up a company confusion

Winding up a company confusion

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This company has not traded for a couple of years.  It currently has £51,000 in the bank and no other assets or liabilities.

Understandably the sole shareholder/director now wants to close the company.  The share capital is £15,000 and the profit and loss reserves £36,000

I was going to propose declaring a dividend of £30,000 in Apirl 2012 and then a capital distribution of £21,000 in say May 2012 and then file a DS01 with Companies House.

This has always worked nicely in the past but I'm now not sure what I need to do under CA 2006 S1003.

Do I still write to HMRC for clearance or has this been abolished.

Are there any problems with the above scenario that I've not thought of.

Replies (3)

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By SJRUK
05th Apr 2012 17:01

Stupid question?

Either no-one knows the answer at the moment or its a stupid question or maybe its just too boring to answer !

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By PatriciaRr
05th Apr 2012 20:02

Good question and hoping someone will give a more polite and helpful answer than above. I was wondering too about whether you still need to write to HMRC for clearance and if so what the suggested  wording was.

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By User deleted
05th Apr 2012 21:27

Ooops

Difficult to argue that any distribution now will be one in anticipation of a striking off. As such, at least £36k will be treated as income. There are some that think the new rules would treat the full £51k as an income distribution, though I (and some others) disagree with that analysis.

Depending on the individual's income position, of course, income treatment may be no bad thing.

Worst case scenario (assuming only £36k taxable as distribution) - income tax of £13k. If capital instead, and Entrepreneur's Relief available, CGT of approximately £2.5k. In that case, worth considering formal liquidation. But the facts will speak for themselves.

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