Taxation During Company Dissolution
If your company or organisation stops trading or is forced to close down, you may still have to file company tax returns and pay Corporation Tax during the closing or winding up process.
There may also be Corporation Tax implications for the company if you sell shares or assets of your company. If you are an individual shareholder, you may also have to pay Capital Gains Tax on any chargeable gains.
Closing a company and Corporation Tax issues
You may be retiring or taking on full time employment; a creditor may have applied for a court order to force you to close down, or a member of the club or association you belong to may want to close it down.
After the winding-up process has started on your company, your Corporation Tax payment and Company Tax Return filing deadline may alter.
This winding up process starts on the earliest of the following:
• Your company goes under administration
• A resolution to shut it down is passed by the shareholders
• A court imposes a winding up order following an application from a creditor or the HMRC if you’ve failed to pay your Corporation Tax.
• If a liquidator is appointed.
A new accounting period begins at the start of your company’s winding up process. Accounting periods will run for 12 months until the wind up is complete.
If your company is in the process of being wound up, it is still subject to Corporation Tax and must continue to file a company tax return and pay Corporation Tax on taxable profits, including:
• Trading and investment income
• The sale of goods or assets to pay off creditors
Winding up the control of the company
If a liquidator or the Official Receiver becomes the beneficial owner of a company, the shareholders or directors have no further dealings with the company, including filing company tax returns and Corporation Tax.
There may be Corporation Tax consequences for your company if it is sold as a going concern.
If your company ceases trading and you sell its assets like machinery and vehicles, your company will be liable to pay Corporation Tax on any chargeable gains and other profits.
Company shareholders who wind up or sell the assets of your company so that it is struck off the Companies Register, will mean that you, as an individual may be liable for Capital Gains Tax or sometimes Income Tax.
You will pay Income Tax if the company is struck off rather than wound up, unless the company’s debts are settled, or any due debts are collected.
If you need further information, please do not hesitate to contact us.