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Sam, Accountant
Category: Tax
Satisfied Customers: 7520
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I own and operate through a personal services

Customer Question

I own and operate through a personal services company.
Because the laws regarding enterpreneur's relief might be changing next year (relief no longer availble if resume trading in same activity in next 2 years), I have been advised to put my company into Members Voluntary Liquidation immediately, and receive the distribution before 5/Apr/16. The normal process to receive the distribution, i.e. the insolvency practitioner putting the company into liquidation, then realising the funds from the bank and giving it to me would take too long and will not be completed this year.
I am being advised that I should immediately transfer all the funds from by business bank account to my personal bank account in the form of a loan, and on the day of liquidation (before 6/Apr/16) sign an indemnity before the insolvency practitioner that I am accepting the the money that I gave myself as loan in lieu of distribution, thus able to claim enterpreneurs relief in this years tax return.
I would like to ask if there are any risks that I need to be aware of in this type of transaction, i.e. paying myself a loan and accepting it as a settlement in lieu of distribution following MVL (e.g. from legal perspective)
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
(Income Tax law, Corporation Tax law)
Expert:  ajlaj01 replied 2 years ago.
Hi Thank you for your question and welcome. My name is ***** ***** I will assist. Does the company have any creditors?
Customer: replied 2 years ago.
Cannot think of anyone other than Insolvency Practitioner and my Accountant's fees, outstanding Tax (Corporation Tax, NI etc) which will be taken care of by the Insolvency Practitioner. To share more specific details - I have a current business bank account and a business term deposit account. I have been advised to transfer funds from the current account to my personal account in the form of a loan. That will still leave sufficient funds in the term deposit account (which only 3m notice to close) to pay the creditors, and also receive a second distribution next year after meeting all liabilities. The money that I have in my current account account is in excess of hundred thousand.
Customer: replied 2 years ago.
The question is related to taxation (Income tax and Corporation tax), not bankruptcy. The business is fully solvent.
Expert:  ajlaj01 replied 2 years ago.
Hi Thank you. I will opt out if you are only looking for tax advice as I am not a tax expert. I would note however you do not need to appoint a liquidator if the company is going into solvent liquidation. Kind regards AJ