Readers' forum : Separation anxiety

We act for a limited company which was trading in the construction industry and has accumulated reserves of undistributed profits in the region of £800 000. There are four equal shareholders being two couples who are all directors. One of the husbands has now retired on health grounds aged 57. The other director and his wife wish to continue with the business. The original intention was to wind up the company and for the continuing director and his wife to form a new company to continue the trade. We understand the distribution on the winding-up of the first company will qualify for capital gains tax treatment for the retired director and his wife. However we believe that the other couple who wish to start up a new company within two years will be caught by the new legislation which will subject their distribution to income tax.

Currently...