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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Will the recent hmrc condoc on members voluntary liquidations

Resolved Question:

will the recent hmrc condoc on members voluntary liquidations effect entrepreneurs relief
for genuine liquidations on retirement ?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
i.e selling Limited company goodwill on retirement and then wish to distribute funds via a members voluntary liquidation and claim entrepreneurs relief on capital distribution.
Expert:  TonyTax replied 1 year ago.
Hi. Your question is somewhat loaded. No government wants to attack genuine claims for ER. The problem for the government is that ER is costing too much, much more than was envisaged when it replaced retirement relief and taper relief, the first of which was only available to those aged 50 and above (unless ill health was a factor). Now, a 25 year old can claim ER again and again which is frankly ludicrous to my mind. All it does is encourage short termism. You can read about retirement relief here. HMRC hardly ever queries a claim to ER and I suspect many spurious claims have been successful. The government wants HMRC to do more checking which will require more staff. It also wants to limit the criteria under which liquidated companies can make capital distributions and the only way I can see them doing that is to limit relief to genuine capital distributions like the proceeds of the sale of goodwill and other business assets (which would appear to your situation) as opposed to a distribution of a massive accumulation of undistributed profit. What the legislation will look like is anybody's guess but there will be winners and losers. The Chancellor has shown himself to be something of a tax hawk so anything is possible. The safest way to avoid changes in the law would be to get your liquidation expedited. I hope this helps but let me know if you have any further questions.
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