New rules on company winding up 14/02/2012
Under Extra-Statutory Concession there has long been a simplified process for winding up a company without the additional expense of a formal liquidation.
The rules have now been embodied within the Companies Act but H M Revenue and Customs have implemented a number of new restrictions.
The Concession allows the distribution to shareholders of the remaining assets of the company to be classed as a return of capital rather than income. With potential capital gains tax reliefs this can prove a much more tax efficient way of closing down a company.
However, HMRC have restricted the Concession to distributions up to £25,000.
It is important that the rules and processes are adhered to carefully otherwise valuable tax relief may be lost.
The new rules are expected to be in place on 1 March 2012.