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Entrepreneurs Relief qualification

A client has had a company with a large bank balance for a number of years. Now he wants to take on a job elsewhere and liquidate the company. Any advice on how the distribution be classed as capital for ER purposes without the use of a liquidator?

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By mrme89
21st Nov 2017 19:01

Depending on the sum, a dividend followed by capital distribution would do the trick. There are other options, however.

You may also need to check the trading status for ER given the ‘large bank balance for a number of years’.

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By Ruddles
to mrme89
21st Nov 2017 19:28

How exactly does a dividend followed by a capital distribution do the trick?

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to mrme89
22nd Nov 2017 09:31

I thought moneyboxing, provided it was passive, was ignored when considering the trading status for ER.

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By Matrix
21st Nov 2017 20:25

How large? I expect the tax saving would exceed the fees which I understand start at £1,500. ER could be withdrawn if he starts again in a new company within 2 years and the main purpose of the liquidation was to gain a tax advantage.

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By Maslins
22nd Nov 2017 10:12

As others have said, how large is "large"? A little over £25k? Or way above?

Also, I note you say the bank balance has been large for a number of years...but has the client continued to trade in that time? If so, then (potentially with an MVL) they may well still qualify for ER. If on the other hand the company has been dormant for many years, they likely won't do regardless of how they chose to close.

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