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 and intangible fixed assets (IFAs) (including goodwill) which are transferred to the proprietor will be deemed to be transferred at market value as the proprietor is connected with the company, see the Connected party disposals guidance note. A transfer for less than market value may also result in a distribution to