The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance considers the tax implications of a company going into administration or liquidation.
A company which is in financial difficulty may go into administration. An administrator is appointed to manage a company’s affairs whilst it is in administration. It usually continues to trade during the period of administration.
The function of the administrator is to fulfil several objectives:
Insolvency Act 1986, Sch B1, para 3 (subscription sensitive)
These are not a set of choices for desirable outcomes, but a hierarchy. The rescue of the company is the priority. The administrator will only actively pursue a better result for the company’s creditors on winding up if this cannot be achieved.
An administrator can be appointed either out of court or with a court order. Out of court, an administrator can be appointed by the company, the directors or the holder of a qualifying floating charge.
Liquidation brings the existence of the company to an end. On completion of the winding up the company is dissolved. Liquidation can be voluntary or compulsory (defined below).
In either case the liquidator becomes the beneficial owner of the company’s assets and is responsible for the payment of all corporation tax liabilities arising after the commencement of winding up. A liquidator is appointed to sell all the assets, pay all the
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