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Company sales business and is liquidated -Tax ?

profit extraction with minimum tax liability

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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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RLI
By lionofludesch
08th Apr 2019 21:14

Both, I'm afraid.

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By johngroganjga
09th Apr 2019 07:42

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.

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Lisa Thomas
By Insolvency Practitioner
09th Apr 2019 10:32

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.

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Replying to Insolvency Practitioner:
By johngroganjga
09th Apr 2019 12:37

What I meant was complete the liquidation. What I assume you mean is start it.

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Replying to johngroganjga:
Psycho
By Wilson Philips
09th Apr 2019 13:03

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.

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Lisa Thomas
By Insolvency Practitioner
09th Apr 2019 12:42

Thanks

Did you perhaps mean to state 'dissolution' instead of 'Liquidation' as 'you have stated you can't Liquidate'...?

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Replying to Insolvency Practitioner:
Psycho
By Wilson Philips
09th Apr 2019 13:05

Did you perhaps mean to state "appoint a liquidator" instead of Liquidate, since the latter is a process - from appointment to dissolution?

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