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:
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.
> 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
> Substantial shareholdings exemption
> Other tax implications of liquidation / administration
> Corporation tax rates
> Mandatory online filing
> Loan relationships
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