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


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