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FURBS winding up

FURBS winding up

I've been asked to look at the winding up of a FURBS for a client.

The FURBS only asset is cash and he has asked if there are any tax consequences of the wind up and the distribution of the funds to him as sole beneficiary? I think that the payment is tax free, as the contributions into the FURBS were taxed on the way in and the FURBS has always paid tax on it's income and capital gains. HMRC have also said similar when their technical department was queried but obviously won't give any advice.

The client would also like to loan some money from the FURBS now to purchase a new business, which he needs very soon so pre the wind up of the FURBS. Does anyone know if this would be caught by the disguised remuneration rules? It talks about commercial loans but I think this only applies where the normal course of business is money lending.

Presumably we could draw up a simple loan deed to state that the loan would be cancelled upon the wind up of the FURBS to avoid the need for the client to repay the FURBS the loan to only get the funds back.

Does anyone have experience of this?


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20th Oct 2011 16:23


If the FURBS makes a loan to the Client it must be at a commercial rate usually base plus 3.5% and interest taxable in hands of FURBS. If he wants money out tax free could be possible if money went in pre 6 April 2006 and he is at retirement age. I thiink retirement age is 50 but not sure.

I have Client who wanted out but he was only 42 and had to take loan which he will have to pay back before he can get it back out at 50. He is hoping that a Bank will lend the money short term when needed. When he set up the FURB he never thought that this would be a problem but in current climate he worries that it might be.

A good IFA may be able to help or the managing trustee.

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By j127430
21st Oct 2011 14:05

Have you given any thought to s394 and paras 53-55 Schedule 35 FA 2004?

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