Then only the deeming provision for computing capital gains which the shareholder received from the liquidator is assessable to tax as `capital gains' to the extent ...which the shareholder received from the liquidator is assessable to tax as `capital gains' to the extent Income-tax Act , 1922, s.12B -Capital Gains-Voluntary liquidation of private limited company--Distribution of assets to shareholders--Surplus ...private companies under liquidation by the liquidators there had been a capital gain which was assessed by the Income Capi- tal gains-Distribution of assets by a liquidator of company in voluntary liquidation--If liable to capital gains ...2.2 A business can be run in a variety of different ways – as a sole trader, a partnership, a trust, or a company.
Entrepreneurs’ Relief means you’ll pay tax at 10% on all gains on qualifying assets.
Companies in good financial standing can use a members voluntary liquidation (MVL) to efficiently wind up the affairs of a company and realise its assets into a cash amount that can be divided up amongst shareholders.
If entrepreneur's relief is available to your company it would effectively reduce your Capital Gains Tax from 18% to 10% on any gains up to £10 million.
That gap will increase from April 2016 and HMRC are concerned that this will present an even greater incentive to liquidate companies to exploit the difference by realising a capital gain.
Just before Christmas, HMRC published draft legislation accompanied by a consultative document setting out their proposals for limiting the opportunities for shareholders to realise a capital gain by winding up their company.