company structures

Question 1

what are the corporation tax consequences of winding up?

Answer 1

• commencement of winding up will lead to an accounting period coming to an end and a new one starting.
• Ct computation will be required for two accounting periods.
• if profit is distributed before the new accounting period it will be treated as a dividend.
• if after accounting period then it will be treated as capital receipt due to disposal of shares.

Question 2

what are the two ways a company can buyback shares?

Answer 2

• capital route (Uk resident and unquoted trading company)
• shares owned for 5 years or 3 if inherted
• buyback from company must be of benefit of the trade
• shareholder must dispose of at least 75% of original holding
• shareholder not be connected with the company after the purchase i.e have more than 30% voting power.

Income route
- taxable on the individual as dividend income

Question 3

What are the close company rules?

Answer 3

• close company is controlled by five or fewer participators.
• loans made to participator, company will pay 33.75% of the loan to HMRC by way of notional tax.
• if loan repaid before notional tax, then no tax on loan.
• any benefit provided to employee/director is treated as a dividend/ and employment income for employee participator.
• amount written of is charged as dividend income for shareholder.

Question 4

IR35 Rules?

Answer 4

-if client is small company- PSC decided if IR35 applies
- if client is large company- they decide if IR35 applies

Question 5

profroma for IRS35 small company

Answer 5

fee
less 5% deduction
less salary
less NIC
subtotoal
less ER nice
Total