Orange & Gold Blog

Winding up a small business

Extra Statutory Concession C16 (ESC C16) is due to become legislation on 1 March 2012, but in a modified form. There will be a £25,000 cap on the amount that can be distributed as capital during the course of striking off.

From 1 March 2012 a company that is ceasing trading with capital and/or retained profit and loss reserves in excess of £25,000 will need to undergo the formal winding up process of liquidation to ensure that these amounts can be paid out and taxed using the capital gains tax regime.

Due to the changes in ESC C16 many small service companies will want to take advantage of ESC C16 before 1 March 2012. If you are in that situation please contact [email protected] and we can advise on the best course of action. However, formal liquidation is not as onerous as it sounds.

In the other matter of Bona Vacantia, the Treasury Solicitor has recently agreed that the Crown will not claim share capital. This is relatively insignificant in situations where for example share capital is 1 share each for a husband and wife, but retained reserves in the business are £80,000.