Thinking of ceasing trading?

If you need to plan the end of the line for your company

We are focused on trying to help our clients come through this difficult period of trading (see our Covid-19 Support Hub), but it’s an unfortunate fact of life at the moment that some business owners will decide to cease trading. There are different ways of doing this, and different tax outcomes for you to consider.

Firstly, is there a way through?

Our corporate finance and banking team may be able to help you to turn it around. In recent cases, even where the owner felt that they were heading imminently for insolvency, we have been able to save their company, with access to finance, a restructure, or a “pre-pack” administration. In another case the trading business could not be saved but we were able to facilitate a sale of valuable assets and intellectual property to give some value back to the owners.

A solvent closure

Despite all else, if the end of the business must come, if your business is not insolvent then there are options over dissolution (“informal strike off”), or liquidation to get the best tax result. The best option for you depends on several things, such as how much the shares cost, your other remaining income, how complex the affairs of your company are to wind up, and the value of the company.   In some cases the best result may be neither dissolution or liquidation, but instead to keep the company in existence but dormant and to drip feed the remaining value as dividends over a number of years to make use of your tax allowances and lower rate tax bands.

Different shareholders may in fact have different “best outcomes” from each other, so it comes to working out the best compromise solution.  Ideally the tax payable would be 7.5% or 10% but could be as high as 38.1% if not considered carefully.

Insolvent liquidation

You won’t have value to extract, but you should consider personal loss reliefs that you may be able to claim on what you paid for your shares, or if you made loans to the company. A variety of capital and income tax reliefs are available depending on the circumstances.

Our Advice

We will provide an empathetic ear to you at what may be a difficult time, and between our tax, accounts, corporate finance and banking teams, and our links with experienced Insolvency Practitioners (liquidators) we are part of a full solution to see your business through to the other side, or at least a managed conclusion.

We are experts at bespoke tax planning and have been nominated for the 3rd year running in the national final of the industry’s Tolley’s Tax Awards as an outstanding tax team.

Contact Rob Durrant-Walker (Author), Business Tax Technical Director rdwalker@garbutt-elliott.co.uk or Tony Farmer, Corporate Finance Partner tfarmer@garbutt-elliott.co.uk.