Private limited liability companies have many attractive features as a business trading medium. Circumstances constantly change however, and it is inevitable, therefore, that there will always be some such companies which have outlived their usefulness, and where the shareholders now wish for there to be a company dissolution.
At this point, where appropriate, we are able to guide you through the company law formalities and tax obstacles of de-registering this business with Companies House and HMRC.
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 sufficient shareholder votes will be cast in General Meeting to carry the resolution to wind-up.
Appointing a Liquidator for a simple formal winding up procedure is often relatively expensive. For most solvent companies a members’ voluntary winding up can be achieved via the less formal dissolution route. Where reserves are less than £25k, advantage can still be taken of HMRC rules, to ensure that, if beneficial, the final distributions will be taxed as capital repayments rather than dividends. We will be mindful of saving you tax, by where-ever possible, either claiming maximum entrepreneurs 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.