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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15658
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Can Entrepreneurs Relief be claimed on the surplus arising

Resolved Question:

Can Entrepreneurs’ Relief be claimed on the surplus arising from a members voluntary liquidation, effectively paying CGT at 10% on the distribution received. The amount involved will be £200k and the relief has not previously been claimed.
Submitted: 4 years ago.
Category: UK Tax
Expert:  Tony Tax replied 4 years ago.

I've had several clients who have closed down their companies leaving a large sum of money in the company bank account which has then been distributed as a capital sum to the shareholders who have then successfully claimed entrepreneurs' relief. The voluntary liquidation was allowed by applying to the tax office for clearance under Extra Statutory Concession C16.

Unfortunately, ESC C16 was enshrined into legislation in March 2012 and the maximum sum that can be paid out under a voluntary liquidation as capital as opposed to dividend is £25,000. In order to treat the full £200,000 as capital, you would need to appoint a liquidator and close the company down formally which is an expensive process.

There are some useful notes here and elsewhere on the internet about the rule changes. I'd advise you to seek out some specialist advice for a detailed assessment of your options.

Let me know if you have any further queries.
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