How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4778
Type Your Tax Question Here...
bigduckontax is online now

Which is the best way to show in Ltd accounts a capital

Customer Question

Which is the best way to show in Ltd accounts a capital distribution namely ESCC16 distribution below 25k if its shown as a dividend it will overdraw the reserves should it be shown as a debit balance on the DLA?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I m Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. My immediate reaction is why you should have to bother about the accounts at all as ESCC16 is an HMRC concession which allows [source Philip Beck; Chartered Accountant {edited}]: 'the directors of a company [below 25K] to effectively wind up a solvent company themselves without appointing a liquidator and pass the surplus funds to the shareholders as capital receipts rather than dividends. This had the dual benefits of a likely lower tax charge on the shareholders (capital gains tax rather than income tax, especially if Entrepreneurs Relief applied), and also avoiding the costs of appointing a liquidator.' As the company is being would up the point appears academic. I do hope that I have shed some light on the situation.