A company with financial difficulty may go into administration and continue to trade. Whereas, liquidation ends the existence of a company. This document covers the tax implications on these, together with the informal winding up; effect on accounting periods; close investment holding company rules; tax deduction for expenses during liquidation; redundancy payments; utilization of tax losses; group relief; substantial shareholdings exemption; and distributions.

Points discussed within this guidance note:

> Introduction

This note explains the tax implications of a company going into administration, or company administration, and the liquidation of a company. Liquidation can be voluntary or compulsory.

> Liquidation

> Informal winding up

A cheaper and simpler way of winding up a solvent company is via an informal winding up procedure, but the tax benefits will depend on whether the amount to be distributed is les than £25,000.

> Effect on accounting periods

> Companies in administration

> Companies in liquidation

> Close investment holding company (CIHC) (prior to 1 April 2015)

> Tax deduction for expenses during liquidation

> Redundancy payments

> Utilisation of tax losses

> Group relationships

> Administration

> Liquidation

> Substantial shareholdings exemption

> Distributions

> Anti-avoidance

> Other tax implications of liquidation / administration

> Corporation tax rates

> Mandatory online filing

> Loan relationships

To view the full guidance note register for a free trial or if you already have access to TolleyGuidance please use the 'login' button below:

Request a Free Trial to TolleyGuidance to gain access to the full article

TolleyGuidance is produced by specialists within the field, our tax guidance materials provide actionable insights and practical guidance to support you day-to-day. We don’t just inform you about the latest changes in the tax world. We take the time to explain the implications and, most importantly, what actions you need to take for your clients.

A bit about you:

Please note that all fields marked with a * must be filled in
First name*
Last name*
Job title*