The Director (and owner) had resolved to retire, and was referred to TBDA by his accountant. The accountant had ensured that all outstanding returns has been filed and the company was up to date with all taxes due. Members Voluntary Liquidation is a very effective way to distribute surplus funds above £25,000 (following the withdrawal of the extra-statutory concession 16) to shareholders in a tax efficient way.
The director/shareholder was retiring and had no intention of starting up again which meant there was no danger that TAAR would apply. This is the targeted Anti-Avoidance Rule which treats a distribution from a winding-up as if it were an income distribution where;
- An individual who is a shareholder in a close company receives a distribution in respect of shares in a winding-up;
- Within a period of two years after the winding-up the individual continues to be involved in a similar trade or activity; and
- The arrangements have a main purpose, or one of the main purposes, of obtaining a tax advantage.
The strategy for the solvent Liquidation was agreed with the shareholder. We drafted the appropriate documents including the Declaration of Solvency, board and shareholder minutes and Indemnity.
APPROVED MEMBERS VOLUNTARY LIQUIDATION SOLUTION
Within 72 hours of Bev Budsworth being appointed a Liquidator, we distributed the bulk of the remaining funds in the company of £230,000 to shareholders. The balance remaining after costs were distributed as soon as tax clearance was given by HMRC and the liquidation was concluded. The process from start to finish took just over 12 months.