THE tax efficient way to close down your solvent business. Prices starting from £2,000.
Since the enactment of Extra-Statutory Concession C16 into the Extra-Statutory Concessions Order 2012, from 1 March 2012 the rules changed to limit distributions which attract capital treatment to £25,000 on the dissolution of a company.
Should total distributions exceed the £25,000 limit, then distributions will be treated as a dividend income (this attracts Income Tax rates of tax).
Shareholders should therefore place their company into a Members Voluntary Liquidation ('MVL') such that no £25,000 limit will apply and distributions will be treated as a capital receipt and therefore subject to Capital Gains Tax rates, including entrepreneurial relief at 10%.
An MVL is not an insolvency procedure as the company is not actually insolvent, although it does come under the remit of the Insolvency Act 1986 and does require the services of an insolvency practitioner. A majority of Directors will be required to sign a ‘Declaration of Solvency’ to state that all of the creditors of the company can be paid together with statutory interest within 12 months.
The company’s assets will then be realised and creditor claims settled before distributing any surplus to the shareholders (this can either be in case or in specie).
We would advise you that specific tax advice should be taken to recommend the appropriate solution for your own circumstances. We are not tax advisors but provide the delivery of an MVL in accordance with tax advice.