Property Company Liquidation

Property Company Liquidation

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A client company owned one commercial property which was rented for a number of years. The property has now been sold (Nov 2007) and CT will be paid on the final company rental profits and gain on the property.

The company has effectively ceased to trade and the 4 directors wish to close the company and extract the cash in the company bank account in the most tax efficient manner.

Three of the directors own 1,000 shares and the other owns 9,000 shares. I am right that this causes an issue for a winding up under ESC C16 as the crown will come for £12,000? Therefore is a formal liquidation required or a member’s voluntary liquidation required to extract the cash as a capital distribution to the shareholders?

I assume CGT will be payable at 18% as there is no chance of securing Entrepreneurs' relief?

Thanks

Jason

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By User deleted
02nd Jul 2008 16:42

Hmmmm
I do believe that if the OSC is over £4000 then a formal MVL is required, however if anyone can confirm that I would be grateful.

I'm sure you could get around it by the company purchasing 11,900 shares back from the shareholders?

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By AnonymousUser
02nd Jul 2008 15:58

Solvency ...

Jason

The only difference between a formal liquidation and a members' voluntary liquidation is whether the directors wish to swear a formal declaration of solvency. An MVL can be a tax efficient way of closing the company off by paying the tax and distributing a dividend to the shareholders.

I suggest you find a good insolvency practitioner and have a chat; if your client in in the North West I'd be happy to speak to you or your client.

Simon Atkins
Licensed Insolvency Practitioner
0845 680 0315

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