If a company, controlled by the director/shareholder sold it business (goodwill) and is immediately put under volunarty liquidation, will it have pay corporation tax on sale of goodwill or the entire proceeds can distributed to shareholders, who will 10% CGT after claiming entrepreneurs relief
Suugestions and thoughts appreciated
Replies (7)
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You can’t liquidate the company until its affairs with HMRC are up to date - particularly including declaring and paying tax on the capital gain on the sale of its goodwill, and any other profits and income.
You need to do things in the right order. Sort out tax, and any other creditors first. Then liquidate.
You can Liquidate before the tax affairs are complete but the tidier they are, the simpler the Liquidation will be.
Any applicable Entrepreneurs relief can only be claimed on the distribution/s made to Shareholders by the Liquidator.
One of those instances where an understanding of the correct terminology would be beneficial.
Liquidation is a process, not an event - as you say, you were referring to the dissolution, or completion, of the process whereas the other respondent was, I assume, referring to appointment of the liquidator.
Thanks
Did you perhaps mean to state 'dissolution' instead of 'Liquidation' as 'you have stated you can't Liquidate'...?
Did you perhaps mean to state "appoint a liquidator" instead of Liquidate, since the latter is a process - from appointment to dissolution?