Most of our contact base will be aware that, following the withdrawal of Extra Statutory Concession 16 by HM Revenue & Customs some years ago now, where a company is no longer required and has reserves in excess of £25,000, the most tax efficient route for shareholders to realise the reserves is often through a members’ (i.e. solvent) voluntary liquidation administered by a licensed insolvency practitioner. The shareholders can pay as little as 10% in personal tax on the distribution paid to them by the liquidator if they qualify for Entrepreneur’s Relief.
We administer numerous members’ voluntary liquidations each year for competitive charges. Given control of the client’s funds are passed to the appointed liquidator for a period of time whilst awaiting tax clearances, clients often take comfort from the recommendation of a trusted liquidator by their accountant or other professional adviser.
Quite apart from tax reasons there are additional ‘peace of mind’ benefits which arise from undergoing the solvent liquidation process. As part of the process, the liquidator advertises for claims and, once the liquidation has been concluded and the company dissolved, directors can take comfort that creditor claims or other potential problems are highly unlikely to ‘emerge from the woodwork’ at a later date. By contrast, in the event a company proceeds straight to strike-off without undergoing the liquidation process, the ‘checking process’ can be less thorough and the company can be resurrected fairly easily, potentially years later, by an interested party.
We are always very happy to provide free advice on general solvent liquidation queries or other insolvency and business rescue matters. We also provide free, no obligation initial consultations for clients who potentially need our help. Please do make use of these free services should the need arise.