Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration
Home Saved articles Viewed items Login Contact Free Trial
|

We are sailing

© Copyright LexisNexis 2024. All rights reserved.

13 December 2011
Issue: 4334 / Categories: Forum & Feedback , Capital Gains , VAT
A director of a one-man IT company has been trading for many years, but the current single contract is to end soon. The company has large cash reserves and the director is considering the purchase of a yacht. He is thinking about winding up the company and buying it personally, but is concerned about entrepreneurs’ relief

Our client is the director/shareholder of his ‘one man’ IT consultancy limited company which has been operating for many years.

The company’s current single contract is coming to an end but it possibly has another contract in the pipeline. HMRC have previously agreed that IR35 does not apply.

The company has significant cash reserves and our client would like to buy a yacht for £350 000 plus VAT. We are aware of HMRC’s approach regarding ‘hobby’ assets for benefit-in-kind purposes and the capital goods scheme and potential capital allowance issues.

As such I am wondering if the company could be wound up at the end of the current contract via a ‘diy’ liquidation (£100 capital only) leaving the client to purchase the yacht personally; but would a claim for entrepreneurs’ relief (ER) be available?

The cash is on short-term deposits with no day-to-day management just...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Subscribe Now...

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

READERS' FORUM premium icon
Read All
Readers forum: Claiming pre-registration input tax Practice tip: 19 December 2024 New Queries: 19 December 2024 Readers’ forum: Should I advise my client to declare income? Readers’ forum: Pension scheme set up as discretionary trust?
FIVE WAYS TO MAKE ACCOUNTS PRODUCTION AND TAX EASIER.
Download the exclusive Xero
free report here.

New queries
Please email any questions you might have
to: taxation@lexisnexis.co.uk.

NEWS premium icon
Read All
Automated tracking system for taxpayers could save £36m a year, study shows Welsh income tax rates are unchanged Business expenditure on R&D rises in 2023 HMRC targets landlords who may have undeclared rents Lump sums cannot be returned to pension scheme
DEADLINE DATES
CASES premium icon
Read All
No extenuating circumstances to extend deadline Delay in issuing penalties was no excuse for late return Sales of occupation income avoidance rules apply Whole of settlement was not subject to tax Payments were taxable as earnings
MOST POPULAR
Readers forum: Claiming pre-registration input tax No extenuating circumstances to extend deadline This week's opinion: 19 December 2024 Automated tracking system for taxpayers could save £36m a year, study shows Welsh income tax rates are unchanged
Copyright © 2024 LexisNexis
back to top icon