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Winding up company

Winding up company

Can anyone help?

A trading company with two 50/50 shareholders plans to cease trade and wind up after approx. 15 years. One shareholder is Director and only paid employee. Trading in final year to date is minimal.  The distributable cash could be £240,000.  Could Coy pay dividends £70,000 this tax year (12/13) and again post 6/4/13 (13/14)?  This would leave £100k.  It could then appoint a liquidator and after fees, etc. the director/shareholder would claim ER on 50% capital distribution (10% CGT) and the other shareholder would simply claim annual CGT allowance (28% CGT).  If this is a sensible/possible strategy please advise on any procedure that should be followed e.g. before Director approaches a qualified Insolvency Practitioner.  If there are pitfalls with this plan or if I have misunderstood anything please point me in the right direction.  Paying a dividend in 13/14 tax year will take the company beyond 28/2 year end so should I preparing to extend y/e date or will the Insolvency take care of this?   I have no Insolvency or company winding up knowledge.

Merry Christmas to all and esp. to anyone taking the time to help me.


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21st Dec 2012 19:24

There are two things to be careful of.


First, you seem to be aware of the rule that if a distrbution in excess of £25,000 is made, it will be treated as capital on an informal winding up.

The legisation is worded so that it catches any dividend payments "in anticpation" of winding up, so you need to be aware that you could fall foul of that.


However, if you are seeking to appoint an ip, to formally wind up the company, I see no reason why your plan should not work!



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