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In the right situation, it is the most tax-efficient way of closing down a business.
An insolvency practitioner will liquidate any assets, pay any creditors and distribute the proceeds to the shareholders.
The distributions to members in a solvent liquidation are taxed as capital, chargeable to capital gains tax, rather than income. This means that there can be substantial tax savings. Tax advice should be sought when you are considering closing down your business, to make sure that you are eligible for the solvent liquidation process.
The company will have needed to cease trading, with final accounts being filed, and final tax returns being submitted. Tax should be paid in advance on the liquidation date, to prevent interest accruing. Once the company is ready to be placed into liquidation, this could be arranged within a timeframe of 1-2 weeks.
An initial payment can be made to members as soon as the cash at bank is received by the Liquidator. This means that a member could receive their money in a week, however the speed of this process depends on the speed company’s bank dealing with the transfer request.
Non-cash assets can be distributed to members ‘in specie’. This includes any unpaid directors loan account, and also other assets such as unpaid book debts, which can be legally assigned to the members. If a solicitor is instructed to assist with property transfers or deeds of assignment, additional legal fees will apply.
The length of time it takes to complete the liquidation depends on the complexity of the liquidation, and how long it takes to bring the company’s tax affairs up to date. Once all matters are complete, the Liquidator will issue a final account to the members and, with the members consent, a report can be sent to Companies House within a matter of days. The company is automatically dissolved around 3 months after this.
This depends on the complexity of the case – please call us for a quote – 01702 344558.
Having recently used DCA to liquidate a company,I would like to praise most highly your help,advice and guidance from the very first meeting to the conclusion. Thanks again for your personal and professional approach.