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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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In December 2014 I closed my media consulting business and

Customer Question

In December 2014 I closed my media consulting business and on the advice of my then accountants put it into voluntary liquidation, as i was taking up full time employment elsewhere.My wife and I were 50/50 shareholders.There was just over 100k in the business bank account at the time after all liabilities had been cleared. They advised that the best way to extract these funds was to claim Entrepeneurs relief.We appointed a liquidator in December 2014, and they carried out their work and have released these funds in three tranches in January, August and December 2015. The members final meeting took place last month and I have variou letters from the liquidator to me and my wife confirming the various amounts paid to us.My question is how do I account for this in the CGT section of my tax return for 2014/15. I would like to clear all the outstanding tax in the 2014/15 return. Whilst I can see where to input the amount for the gain, how do I explain what it was for and what information would I need to provide.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. The figures will end up in the SA108 pages which you can see here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/420000/sa108-2015.pdf The guidance notes are here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/420007/sa108-notes-2015.pdf You need to look at the unlisted shares and securities section on page CG2 of the SA108 pages, boxes 24 to 29. In the HMRC online tax return, when you reach the capital gians section you will be offered the chance to complete a worksheet and you should use this as it will attach this to your tax return automatically and send your calculation to HMRC in the correct format as opposed to you having to create your own PDF calculation which you have to attach to the tax return manually. You should complete the boxes as follows: Box 24 1, Box 25 50% of the sum you received after the liquidation costs were paid, Box 26 The original cost of the shares when you set up the company, probably £50, Box 27 Box 25 - Box 26, Box 28 ERL (see page CGN3 of the guidance notes), Box 29 Leave blank, Box 37 The gain is eligible for entrepreneurs' relief. The worksheet where you put all the above is pretty much self-explanatory. I know that liquidators are paying out sums so that you can disclose the gain over two tax years and get two CGT exemptions. This is risky in my opinion so you would be better off to disclose it all in 2014/15 in my opinion. I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15840
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
TonyThanks for your swift response. I will back to you in the next day or so if I have any follow up questionsKind regardsDon
Expert:  TonyTax replied 1 year ago.
OK.
Customer: replied 1 year ago.
Hi Tony
A couple of further questions - in box 37, does this require any further explanation other than "the gain is eligible for entrpeneurs relief" ie the name of the business etc?Should I enc;ose the letters from the liquidators confirming the amounts paid?As my wife was the other shareholder, does exactly the same information go on her CG section of her return?Thanks again for your help
Expert:  TonyTax replied 1 year ago.
If you put the nmame of company in the CG worksheet it will be obvious but if you can do that in box 37 and use no more than 240 characters in total, then do that.
Don't send anything to HMRC until they ask for it.
Your wife's disclosure should mirror yours.
Customer: replied 1 year ago.
HI Tony
Thanks again for your responses. I am using Pastel / Keytime software rather than the HMRC version. I have not had a CGT entry before so I am struggling a bit with the data entry sheet. The liquidator has obviously paid out net of costs but should I be showing their costs etc.RegardsDon
Expert:  TonyTax replied 1 year ago.
I have just dealt with such a case. The liquidator costs are company costs, not yours personally. Your gross disposal proceeds are what you received personally.
Customer: replied 1 year ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  TonyTax replied 1 year ago.
I won't be able to call until about 1.15pm. Is that OK?
Customer: replied 1 year ago.
Hi Tony
Yes thats fine. My number is *****(###) ###-####Thanks
Don
Expert:  TonyTax replied 1 year ago.
Thanks. I'll call at 1.15pm.

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