If we sell the business exactly how much Tax do owners pay?

poseidon1

FrankFalcon said:

I believe what I just alluded to is called ‘Solvent Liquidation’. 

Indeed, as set out in the link below-

https://www.pkf-l.com/services/advisory-restructuring/restructuring/members-voluntary-liquidation-mvl/#:~:text=A solvent liquidation (Members Voluntary,to complications is much reduced.

However an 'in specie' distribution of the property to the shareholders as part of  an MVL would still trigger a corporation tax bill at company level but with insufficient funds to pay the tax due.  

FrankFalcon

Dead_keen said:

FrankFalcon said:

I believe what I just alluded to is called ‘Solvent Liquidation’. 

Yes, it is a "members' voluntarily liquidation".  It's basically my idea "4" above but in a different order.  I had (i) directors sell all assets, (ii) shareholders start MVL of company at a time when cash is its only asset, (iii) liquidator pays cash to shareholders, and (iv) at the end of the MVL the company ceases to exist. 

Your idea is: (i) start MVL when company has both the property and business, (ii) liquidator (not directors) sells the company's assets for cash, (iii) liquidator pays cash to shareholders, and (iv) at the end of the MVL the company ceases to exist. 

To me, getting the liquidator involved in selling assets will be more expensive and less flexible than if the directors did it.  It could also take more time for you to get the cash compared to just an MVL of the company holding cash.  But the tax rate you pay will be the same (* unless the liquidation process goes on more than three years after the trade stops).

Aghh, indeed! You sir are spot on! Initially, I couldn’t get my head round this one, but after you have explained it I understand more. 

Thank you.  

It looks like a call to a licenced liquidator is the best way forward in the new year… would you agree? 

Dead_keen

FrankFalcon said:

It looks like a call to a licenced liquidator is the best way forward in the new year… would you agree? 

No, I would not agree.  They would have no clue about the wider tax and commercial agreements.  Get a tax adviser and a lawyer, and understand what the purchaser wants.

poseidon1

Dead_keen said:

FrankFalcon said:

It looks like a call to a licenced liquidator is the best way forward in the new year… would you agree? 

No, I would not agree.  They would have no clue about the wider tax and commercial agreements.  Get a tax adviser and a lawyer, and understand what the purchaser wants.

Another endorsement in favour of the  tax adviser/lawyer combo to structure optimum exit strategy.