MVLs have often been considered a tax efficient method of bringing a company’s trading to a close.
MVLs are the solvent method of liquidation whereby the company is not in debt and has enough funds to pay off all its liabilities, leaving a residual balance of funds and/or assets to be returned to the shareholders.
Any reference to tax and indeed efficient tax management has long been of interest to the government, ensuring that the fine line between evasion and avoidance is not blurred.
Entrepreneurs’ Relief currently means “You may be able to pay less Capital Gains Tax when you sell (or ‘dispose of’) all or part of your business. According to gov.uk, Entrepreneurs’ Relief means you’ll pay tax at 10% on all gains on qualifying assets”.
The previous government set in motion changes to Entrepreneurs’ Relief, specifically the publication of the 18/19 Finance Bill.
The key here is the guaranteed reduction in the number of shareholders being eligible to claim Entrepreneurs’ Relief and the likely changes to eligibility which promise to be far more complicated than before.
Shareholders are therefore advised to be aware of the likelihood of future changes coming as early as March 2020 and in the interim, if you are considering your options, take some advice from My Insolvency without delay.
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