Distributing company reserves

Distributing company reserves

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company ceased trading 30 june 2006. final accounts produced showing £1000 share cap and £8000 p&l reserves.

thoughts are to advise director to merely withdraw the remaining £9000 from the bank resulting in a capital gain of £8000 on his shares (and therefore below annual exemption). - as he is a higher rate payer this is obviously the better way.

do i need to advise the revenue of this and/or have i overlooked anything?

many thanks in anticipation and merry christmas!!

Victor Meldrew MAAT

Replies (6)

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By wdr
28th Dec 2006 09:46

Not quite that simple-but you can enjoy the outcome you want
A simple payment as you suggest would be a distribution, giving rise to an effective 25% higher rate charge.
What you need to do is apply to the corporate Inspector for ESC C16 treatment for an informal dissolution under s653 of the 1985 Companies Act [CA 2006 s1000].

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By AnonymousUser
28th Dec 2006 16:02

I agree with the Grumpy Git but I would add

The £1,000 share capital is not his to take. It belongs to the queen under the bona vacantia rules.

A formal liquidation is required to get his hands on this. Don't however waste time looking for a liquidator who would do it for less than £1,000.

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By flurrymc
02nd Jan 2007 15:18

Response to Alastair
Alastair,
have a read of the Treasury Solicitors guidelines I gave a link to below. Paragraph 8 says “---the Crown would be entitled to recover that distribution from the members. ---“

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By flurrymc
02nd Jan 2007 12:27

Treasury Solicitor's Concession
The Bona Vacentia Division of the treasury solicitor have published in their guidelines on company share capital a concession - this states, in effect, that if the share capital is less than £4,000 they will not pursue recovery .

See http://www.bonavacantia.gov.uk/default.asp?PageId=1409 paragraph 9.

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By listerramjet
02nd Jan 2007 13:06

i'm intrigued
if there is no cash in the company, then who would they pursue?

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By AnonymousUser
02nd Jan 2007 16:44

I didn't know that

Thanks, Mr McCarthy.
One lives and learns.

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