Tax consequences of disincorporation

There are potentially some unfortunate tax consequences of disincorporation depending on the assets held by the company and the proprietor’s own position. It is important that tax advice should be sought in advance.

Disincorporation of a company and transferring the trade to the proprietor’s sole trade has the following tax effects:

1. •

   chargeable assets (which usually includes goodwill at market value) which are transferred will be deemed to be transferred at market value as the trader is connected with the company, see the Connected party disposals guidance note. It may be necessary