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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...

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We are sailing

© Copyright LexisNexis 2024. All rights reserved.

13 December 2011

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.

Issue:

4334

Categories: Forum & Feedback [1] , Capital Gains [2] , VAT [3]

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