The demise of C16 - an opportunity?
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.
- Being Tax relevant 387 5
- FIFA game and making money 134 6
- 50% Shareholder & Director stealing money from the business 129 3
- Any Scottish members out there? 6,296 230
- Client has never prepared tax returns 327 2
- Kind of shares to take in an LTD 107 2
- Recycle old study books 402 10
- Tax investigation pending 1,390 8
- Trademark Fun 257 7
- CIS paid on behalf of a limited company 86 2
- Distribution on cessation of trade 227 4
- Anti Money Laundering Checks 157 1
- Changing font size in VT Transaction+ 224 6
- What's your best practice shortcut or 'hack'? 1,538 38
- Can I strike off a company by filing DS01 online? 236 2
- VAT Fuel Scale Charge for Fuel on Private/Personal Car 195 3
- Subsistence - god I hate it! 719 14
- How to issue a loan correctly? 242 2
- Would Director's dividends on non-voting C shares risk being classed as "earnings" for NIC purposes? 203 1
- Share for share exchange 177 3
- Raiders of the Lost Tax File 1,062
- Chartered Accountant in County Down N.Ireland 345
- IPP (International Pension Plan) income 292
- National Insurance 246
- valuation of intangible asset FRS10 and FRS20 226
- Joint construction arrangement CIS and VAT 224
- Cass 5 FCA Client Money Software recomendation 210
- Payments on account coded out?? 204
- Non Resident 165
- Franchise income and costs 155