At Inquesta we are specialists in solvent winding up procedures in order to extract the assets of a company in the most tax efficient manner or as a restructuring of the business.

The Enactment of Statutory Concession – C16  (ESC-C16) which came into force on 1 March 2012 requires a solvent liquidation (known as a members voluntary liquidation) in order to extract the remaining cash out of the business as capital rather than as income.  There are substantial tax savings through liquidating your company in this way.

HMRC have issued a tax information and explanatory note regarding with withdrawal of the ESC C16 which can be downloaded here.

Below is an example of the costs saving by doing a capital distribution through a liquidation compared to issuing a dividend:-

Tax payable on capital gain
Gain 250,000
Annual allowance (10,600)
Taxable gain 239,400
Tax @ 10% 23,940
Cost of Liquidation 5,000
Total cost of cessation 28,940
Tax payable on dividend
Dividend 250,000
Gross dividend 277,778
Basic rate band
@ 10% 3,500
@ 32.5% 37,375
@42.5% 54,306
Less: tax credit (27,778)
Total cost of cessation 67,403
Saving 38,463

Notes

– Assumes capital gain qualifies for Entrepreneurs Relief
– Assumes income tax personal allowance used up as salary
– Cost of Liquidation may vary from case to case please call for a fixed fee quote

 

Section 110 Scheme of Arrangements are available for shareholders of a company to re-organsise their shareholdings into a new corporate structure or alternatively to split their shareholdings.

For example, if there is a trading business and properties in one company and there are two shareholders, one who wants the trading business and the other who wants the properties, the scheme ultimately allows  the shareholders to transfer the trading business and properties into two new companies which would be owned separately by the respective shareholders.

Please contact us for a no obligation fixed fee quotation which includes all statutory disbursements.