ENERGY CONSULTING SERVICES COMPANY

The company was incorporated in 2013 and traded successfully from the outset. The company was in a position to pay substantial dividends to its shareholders at the end of each financial year, from 2013 to 2016, whilst at the same time accruing reserves.

Towards the end of 2016, the Director (and owner) had resolved to retire, and was referred to TBDA by his accountant.

The accountant had ensured that all outstanding returns has been filed and the company was up to date with all taxes due. Members Voluntary Liquidation is a very effective way to distribute surplus funds above £25,000 (following the withdrawal of the extra-statutory concession 16) to shareholders in a tax efficient way.  

The director/shareholder was retiring and had no intention of starting up again which meant there was no danger that TAAR would apply. This is the targeted Anti-Avoidance Rule which treats a distribution from a winding-up as if it were an income distribution where; 

• An individual who is a shareholder in a close company receives a distribution in respect of shares in a winding-up; 

• Within a period of two years after the winding-up the individual continues to be involved in a similar trade or activity; and 
• The arrangements have a main purpose, or one of the main purposes, of obtaining a tax advantage. 

The strategy for the solvent Liquidation was agreed with the shareholder. We drafted the appropriate documents including the Declaration of Solvency, board and shareholder minutes and Indemnity.