The following Owner-Managed Businesses guidance note Produced 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:
the first of these is to rescue the company as a going concern
the second is to achieve a better result for the company’s creditors as a whole than would be likely if the company was wound up
the third objective is to realise property in order to make a distribution to one or more unsecured or preferential creditors
Insolvency Act 1986, Sch B1, para 3
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 debts and return any surplus capital to the shareholders of a company in liquidation.
Voluntary liquidation is where the company chooses to be liquidated. This normally applies where the company is solvent. The liquidation starts when the members pass a resolution to wind up the company voluntarily.
Compulsory liquidation is when the company is ordered by a court to be
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
This guidance note explains how to calculate the amount of tax that arises under the lifetime charge. In general terms the lifetime charge will apply to individuals who transfer property into a trust that is subject to the relevant property regime. See the Chargeable transfers and Occasions of
Many people work from home either on an informal or a full-time basis. These people can be employed or self-employed, and their employment status affects the expenses they can claim as a deduction from their earnings.When dealing with someone working from home, it is important to remind him that
Employee benefit trusts (EBTs) are commonly used to support employees’ share schemes and to provide other benefits to employees in the form of pensions and bonuses.Their use has been significantly affected by the introduction of the disguised remuneration rules. Although the statutory exclusions
Business asset disposal relief (previously known as entrepreneurs’ relief) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. For disposals made on or after 11 March 2020, the relief is available on up to
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.