This Practice Note outlines:

1. •

   the main corporation tax consequences when a UK incorporated company enters into an insolvent liquidation process, and

2. •

   certain other tax considerations which arise during the course of the liquidation

Liquidation is the process of concluding or winding up the affairs of a company prior to its dissolution. There are two distinct types of liquidations: one that applies to companies that are insolvent (ie where a company’s liabilities exceed its assets or it is unable to pay its debts as they fall due) and another for companies that are solvent.

This Practice Note applies to insolvent liquidations, comprising:

1. •

   creditors’ voluntary liquidations (CVLs) (despite the name, a CVL is initially commenced by a meeting of the board of directors and the company is placed into liquidation by the passing of a resolution of the members (not the creditors) of the insolvent company—creditors are unable to voluntarily wind up a company, but they can petition for a company’s compulsory liquidation), and

2. •

   compulsory liquidations