Members Voluntary Liquidation

[Sausage Surprise]

Can you answer following the question honestly with "yes"?

I am intending to close down those company and start a new one for commercial reasons rather than gain a tax advantage?

What about closing the company for personal reasons i.e. you've split up with the wife who happens to a 40% shareholder and you want to sever all ties (just in case).

[TheFaQQer]

What about closing the company for personal reasons i.e. you've split up with the wife who happens to a 40% shareholder and you want to sever all ties (just in case).

Then you can't claim ER.

IANAA.

[Sausage Surprise]

Then you can't claim ER.

IANAA.

Hmm..
Any suggestions for a valid reason then?

[jamesbrown]

Hmm..
Any suggestions for a valid reason then?

That you're going to stop contracting and have no immediate intention of continuing in substantively the same vein at any time in the future?

[Maslins]

What about closing the company for personal reasons i.e. you've split up with the wife who happens to a 40% shareholder and you want to sever all ties (just in case).

As has been said before, this is all untested, so I don't think any of us can give much more than a personal opinion. However I think what you've suggested would be sound.

Yes, hypothetically your wife could transfer her 40% shareholding to you, but if you're splitting up, it's not hard to imagine that she might not be particularly inclined to make your life easy. A liquidation is a reasonable way of getting a third party involved to ensure finality on the company, and to an extent, ensure shareholders are treated fairly.

However, if shortly after the liquidation you reconciled with your wife, made her a 40% shareholder in the new company, then you repeated the situation a couple of years later.....!

[TheFaQQer]

Hmm..
Any suggestions for a valid reason then?

I'm retiring and not going to start again.
I'm stopping this business but will start something completely different.
I'm going permie.

[BrilloPad]

I'm retiring and not going to start again.
I'm stopping this business but will start something completely different.
I'm going permie.

Is "I am trying to evade the two year rule" not valid?

[Alan @ BroomeAffinity]

What about closing the company for personal reasons i.e. you've split up with the wife who happens to a 40% shareholder and you want to sever all ties (just in case).

Nothing to stop you doing that but you're not stopping contracting so ER can't be claimed.

[Maslins]

Nothing to stop you doing that but you're not stopping contracting so ER can't be claimed.

I think if HMRC were to argue that whilst the company may have been closed the underlying business continued to trade, then ER wouldn't be relevant as the distributions would be taxed as dividends rather than via CGT.

[Sausage Surprise]

Is "I am trying to evade the two year rule" not valid?

I know of contractors that do this.