HS275 and CG64055 are leaflets/legislation about claiming ER and the conditions surrounding such claims. These specifically mention capital distributions.
So if the relief is claimed within the CGT pages (property/assets and other gains) then somehow must enter date(s) of acquisition/cost or market value to give a total costs figure.
However, if capital distributions are cash then disposals must be at no gain/loss: or is cash /bank balances) specifically excluded from a claim -if so where within the legislation is this specifically written as I can't see it (I dont think it is though?) Thank you in anticipation of replies..
Company is being wound up, shares will not be sold and entrepreneurial relief claim will surround the withdrawals of cash (sole asset of he company) from the bank account.
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I am not sure what your question is. The gain to which ER may be applicable is the gain your client makes on his shares - essentially the liquidation proceeds less what he paid for them. You seem to be looking at gains in the company rather than in the hands of your client.
Are you saying that there were a number of director loans that were later cleared by a dividend? And that you now want to treat that as a capital distribution?
If the reserves exceed £25,000 there will need to be a formal liquidation for capital treatment to apply. Unless capital treatment applies your concern about ER is academic. Do the reserves (before deducting any distributions that may be held to have been made in anticipation of the liquidation) exceed £25,000, and if so is a formal liquidation taking place?
On those facts you need a formal liquidation for capital treatment to apply. If you are going to argue that the withdrawals to date were not distributions in anticipation of the winding up you will not win.
When you advised on a formal liquidation did your advice include an explanation of the tax saving that would follow from it? If so, you are in the clear and the problem is your clients’.
No your assumption is not right unless you think you can win the argument that the withdrawals to date were not in anticipation of the winding up.
You don’t seem to have read my previous responses. Without a formal liquidation all the withdrawals will be taxed as income, at the dividend rates. It may not be too late for your clients to change their minds.
Okay. Do you know of a liquidator with whom you can put me in touch.
regards,
Why not use the one you've been in contact with?
What makes you think cash would be no gain/no loss? As it certainly wouldn't.
This is definitely one for your accountant!
The OP is an accountant, albeit a sole practitioner (no offence meant, I merely mention as he may have no one else to ask).
What is your client's marginal tax rate this year? Have dividends actually been declared in 2017-18 or not?