Key tax consequences of an insolvent liquidation
Produced in partnership with Julia Fox of Deloitte LLP and Anthony Davis
Key tax consequences of an insolvent liquidation

The following Tax practice note produced in partnership with Julia Fox of Deloitte LLP and Anthony Davis provides comprehensive and up to date legal information covering:

  • Key tax consequences of an insolvent liquidation
  • Change in priority of tax liabilities in an insolvent liquidation
  • Provable debts
  • Expenses of the liquidation
  • Set-off
  • Special accounting periods for companies in insolvent liquidation
  • Rules on accounting periods and their effect on the use of tax losses
  • Ability to set trading losses arising on or after 1 April 2017 against capital profits
  • Ability to set trading losses arising before 1 April 2017 against capital profits
  • Beneficial ownership
  • More...

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 company is placed into liquidation under a CVL 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

For more information on these statutory procedures, see:

  1. Creditors' voluntary liquidation (CVL)—overview, and

  2. Compulsory liquidation—overview

Subject to transitional provisions, the rules applicable to insolvency procedures were amended with effect from 6 April 2017. This involved the repeal of the Insolvency Rules 1986 and the introduction of the Insolvency (England and Wales) Rules 2016 (Insolvency Rules 2016). For information on the key changes, see Practice Note: A summary of the key changes in the Insolvency (England

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