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Liquidation: Be careful!

Shared from Tax Insider: Liquidation: Be careful!
By Chris Thorpe, October 2021

Chris Thorpe looks at the role that liquidations can play in tax planning and the pitfalls.

Once a business or a limited company has run its course, for whatever reason, the owner needs to decide what happens to it; the company will not automatically die with them. Hopefully, there is a family member who will take over the reins, or maybe a senior employee; or perhaps a larger competitor will take the shares off their hands. But if not, the company will have to die with the owner – and this usually takes the form of a Members’ Voluntary Liquidation (MVL), i.e., a solvent liquidation. 

Informal methods

It is possible to strike off a solvent company from the Registrar of Companies informally with the remaining assets going to the shareholders without the need for a liquidator – much quicker, cheaper, and simpler. However, from 2012, only the first £25,000 worth of those

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