Hi,
I am a contractor(software developer) and own a personal services company, that I use to invoice the client. I am the sole owner and trading since 2011 (i.e. longer than 1 year). I pay myself a small salary and occasionally dividend - but bulk of my revenue is still held in my business bank current account.
Since I do not have a cash flow problem at the moment I do not intend to transfer the funds in to my personal bank account in the form of salary or dividend, and intend to eventually liquidate the company (Member's Voluntary Liqudation) and claim the money as a profit - which is tax efficient if I claim Enterpreneur's Relief (I am below the threshold).
Generally speaking I qualify for ER, but I think I read somewhere in the past companies such as mine, which do not invest in fixed assets, and hence "cash rich" may be deemed as "investment company(?)" by HMRC, and ER may be denied in these cases.
1)I would like to know if this is true and then under what circumstances it is, and if there are any other less obvious reasons for which Enterpreneur's Relief can be denied.
2)Does it make any difference (or make it worse) if I invest the money held in business current account in business term deposits to earn some interest.
Thanks
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