Case study ― closing a company down

Produced by Tolley in association with of Crane Dale Tax, part of AMS Group

Owner-Managed Businesses

Guidance

The key choices

This guidance note covers the typical scenario of a business having completed its active lifecycle, the owners’ choice of what to do next, and the tax implications of those choices. Additional factors may come into play where the company is insolvent; this commentary assumes the scenario of the end of a solvent company owned by shareholders who are individuals.

The case study

Angelica and Davros have owned Blob Ltd for many years. The company has now reached the end of its lifecycle as its key market, art supplies, has dwindled due to on-line competition. Angelica and Davros are 50:50 shareholders and they intend to dissolve the company and take up paid employment elsewhere. The net assets of the company on the balance sheet are £1.3m.

As the company is worth more than £25,000 then they cannot simply dissolve the company and get CGT treatment on the proceeds for their shares, they must formally liquidate it.

Case study example workings

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Rob Durrant-Walker

Tax Director at Crane Dale Tax , Corporate Tax, OMB, Personal Tax

Rob is a cross-tax advisor with a particular focus on property tax planning, and business structure planning for OMB’s. He provides tax advice to other accounting firms, balancing commerciality, ethics, and understanding complexity. His 30+ years of experience start at the Inland Revenue in Hull. After completing his ATT and CTA by 1999 with PKF, he subsequently worked at KPMG and UHY prior to managing the business tax team as a director at Garbutt + Elliott. Rob is now Tax Director at the independent tax consultancy, Crane Dale Tax. He is a regular author for Taxation magazine with many articles and Readers Forum contributions since 2005, and he contributes as a virtual member to the CIOT Property Tax technical committee. Rob works remotely from Vancouver in Canada.

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