Solvent Liquidations

Private limited liability companies have many attractive features as a business trading medium. Circumstances constantly change, and it is inevitable, therefore, that there will always be some such solvent companies which have outlived their usefulness, and which the shareholders now wish to voluntarily wind-up.

At this point, we are able to guide you through the company law formalities and tax obstacles of de-registering this business with Companies House and the Inland Revenue.

Prior to commencing this exercise, it will be necessary to consider the following:

• Whether it may be beneficial to make the company dormant, rather than fully dissolved,
• Whether retained profits are best extracted prior to winding-up, as salary, dividends, or pension contributions, or left within the company to create a revenue or capital distribution upon winding-up,
• Whether it is beneficial to repay capital in more than one tranche; typically either side of 5th April, to make use of 2 years' capital gains tax annual exemptions,
• The implications of winding-up upon any ongoing contractual relationships,
• Whether advantage can be taken of the £4,000 non distributable reserves de-minimus concession, to avoid the problems associated with bona vacantia.
• Whether sufficient shareholder votes will be cast in General Meeting to carry the resolution to wind-up.

Appointing a Liquidator for a formal winding up procedure is expensive. For most solvent companies a members' voluntary winding up can be achieved via the less formal dissolution route. Advantages can still be taken of Inland Revenue concessions, to ensure that, if beneficial, the final distributions will be classified as capital repayments. We will be mindful of saving you tax, by where-ever possible, either claiming maximum taper relief on the final distribution or converting it from a capital loss into an income loss.

If your situation is such that a formal liquidation is required, we shall be pleased to introduce you to a suitable Insolvency Practioner.

Practical Examples of our Solvent Liquidations Expertise

Dissolving small companies that have served their purpose. Keeping a non trading company dormant and preparing and filing all necessary paperwork with the Inland Revenue and Companies House.

Winding up single project property development shell companies. Winding up companies to avoid the consequences of IR35 tax legislation.