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Business asset disposal relief

Use of business asset disposal relief for tax planning. Reclassification of earningas capital gains

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Has anyone had experience of the effectiveness of using it for a small company for tax planning to reclassify earnings as a capital gain?

Let retained earnings build up instead of paying them out. Then wind up the company, and obtain 10% cgt relief instead of eg 38.5% on divis.

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By johngroganjga
01st Apr 2021 11:29

Yes but you can only do it once can’t you?

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Replying to johngroganjga:
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By GR
01st Apr 2021 13:29

If you google "taar 2 year rule" it seems like you could do it more than once but you have to completely stop trading (even via connected people) for at least 2 years in the same or similar activity.

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Replying to GR:
By johngroganjga
01st Apr 2021 14:21

Yes I was simplifying slightly, but having to cease the activity for two years is likely to be fatal to the chances of restarting it successfully again. Customers will have gone elsewhere etc.

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Replying to johngroganjga:
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By c Land
01st Apr 2021 17:49

Thank you .That's very helpful. I googled TAAR, followed by "money boxing". This led me to the "contractors" website.
I think HMRC have successfully stopped avoidance.

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Replying to GR:
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By Tax Dragon
01st Apr 2021 14:57

The TAAR extends the scope of the existing anti-avoidance.

Read some stuff (including certain comments in here) and you might think it restricted the scope.

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Replying to Tax Dragon:
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By Wilson Philips
01st Apr 2021 16:31

Indeed. There are those that seem to think that becuase the TAAR exists we can just forget about any other anti-avoidance that might otherwise have applied.

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By Tax Dragon
01st Apr 2021 11:40

Why? Are you looking for an advisor? You'll need to uncloak if so, or how will anyone contact you?

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By Wanderer
01st Apr 2021 11:46

I have some thoughts on why it may not work however as you have deliberately abused the anonymous function I'm not minded to share.

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By peterpaice
01st Apr 2021 11:59

what you should do is not trade for 2 years and claim it. You should then start up again and again and again each time claiming business asset disposal

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