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.
- Client tied in to accountant. Unfair contract? 191 6
- S445 tax V's new dividend tax 356 7
- Self-assessment statistics 2,319 55
- Director started half way through the year no previous income. Pro rate NI 127 11
- OneNote is fantastic 298 10
- Owning overseas property 157 1
- Accountant won't release working papers 2,371 38
- Legal structure of a group of friends producing a free newspaper 343 7
- Fees to charge for Auto enrolment Pension for small Employers 264 3
- What's happened to Smith's Taxation 260 1
- Expedia say that they can't give me a VAT invoice 667 13
- Auto enrolment confusion 1,121 21
- Importing Sage Data and Year End 99 1
- PPR on a development? 231 4
- PAYE – Directors NI 371 7
- Do I walk away from these accounts? 915 19
- Private Residence Relief 1,796 15
- Cloud accounting package 211 1
- Incorporation after the start of trading 1,030 39
- Setting up offshore to avoid paying VAT 524 15
- Self employed and HMRC Worldwide Subsistence Rates 638
- VAT on Export Outside EU and Conditional Sale 397
- Acrobat Checkbox Help for New 64-8 395
- Property letting & CAs 382
- 2015 tax year end 375
- Interest paid - do new rules affect Tax Credits? 374
- FCA regulated company in a small group 336
- MLR and benefitting from the disclosure 230
- Market Invoice (P2P invoice discounting) tax treatment 227
- Self employed consultant working in Ireland 214