Distribute surplus funds in a tax effective way to the shareholders

Not all winding ups are insolvent - a successful company may need to be wound up so that retained profits can be distributed to shareholders in a tax efficient way with the added benefit that the company’s affairs are closed down and finalised.

The liquidation of a solvent company can be relatively straight forward and the key to minimise costs and ensure a smooth exit is in the planning.

1. Agree a work plan

   We generally work with the directors and their accountant prior to our formal appointment to agree a work plan that covers all aspects that need to be dealt with to ensure the process is as efficient as possible, enabling directors to carry out as much or as little of the preparation as they wish. This enables us to provide a cost effective service that maximises the return to the shareholders. In the majority of cases the company’s existing accountants are retained to deal with minimising potential tax liability as they are already familiar with the company’s tax position.

2. Section 110 schemes

   As well as winding up a solvent company to distribute the surplus funds to creditors there are also schemes available to split different aspects of a company’s business into separate entities in a tax neutral way. These are often referred to as Section 110 schemes and we have acted in relation to a number of such schemes usually as a result of a part business sale or as retirement planning.