Liquidation Guide

We have all you’ll need to a make the right decision on liquidation for a company.

Follow this guide to answer key questions about liquidation for a company. If you’d like to learn more or just have a quick question, please let us know.

What’s your goal?

Close a Company and Take the Reserves and Assets Out.

Close a Company and Walk Away.

Close a Company and Start Again.

Close a Company and Take the Reserves and Assets Out.

Members’ Voluntary Liquidation is the correct type to use.

Tax is often a key to see if a liquidation is the right.

Entrepreneurs’ Relief may apply. This is a tax relief for capital gains tax of a person.

Do You Have a Tax Adviser?

To be clear on tax related to Members’ Voluntary Liquidations is key.

A payment to company owners in this type of liquidation will be usually be treated as a capital gain. Capital gains tax will then apply instead of income tax.

You may take care of your own tax affairs. You may have an accountant or tax adviser to help with your company and its owners.

The owners may be able to claim Entrepreneurs’ Relief which is a personal capital gains tax relief.

As liquidators, we don’t can’t offer tax advice. We are work your accountants and tax advisers.

When Do You Want Close?

Which tax year a liquidation takes place in may be a factor. The owners personal tax position will key.

We will work with you and your tax advisers or accountants to set the best date for the liquidation.

Do You Have a Company Accountant?

An extra set of accounts will be needed on top of the company’s usual accounts year end.

The start date is a new accounting period for the company. This will give some extra work for your accountant.

This extra set is up to the day before liquidation starts.

What's the Split of the Shareholdings?

Company owners will need to agree to liquidate. It is the record of a vote by the owners to approve this that is the start date.

How long before the start date owners need to be aware of a vote can vary but is usually 21 days.

Owners can agree to reduce this time down.

If owners are in contact with each other and are able to reply quickly then a liquidation can take place quickly.

Are All the Shareholders Contactable?

If there are a number of owners, then it can slow things down.

The ease of getting in touch with owners is key.

Close a company and Walk Away.

If the company has reached the end the road then liquidation may be the only choice.

How Long Do You Have Before You Want to Close?

Those owed money will try to get paid.  How far along a legal payment recovery path have they gone? When legal action is about to start then it’s often the time to liquidate.

When a critical payment such as wages or rent will be missed then taking action before this will allow things to be handled more smoothly.

Are There Any Employees?

If a company cannot afford to pay the employees what they are due the UK Government will help. The Government will pay staff in a liquidation

There are limits set for payments.

https://www.liquidation.co.uk/does-the-government-provide-support-for-employees-of-insolvent-companies/

Does the Company Have Premises?

If rent is past due a landlord may have begun to take legal action. Will losing the premises stop trading?

Rent due soon that can’t be paid can lead to a need to help. Advice before a business must close may change the result.

Have All of the Business Rescue Options Been Explored?

Creditors’ Voluntary Liquidation. This is for a company that can’t pay what it owes.

If a company acts too late it can be closed without a choice. This would be a court process.

Are you aware of all the choices?

Liquidation and rescue options.

Are There Any Debts That Will Survive A Liquidation?

A director or owner will not usually be responsible for money owed.

Personal Guarantee. A director may have agreed to pay what a company can’t pay.

If a director has been lent money from the company; they will owe that back.

It’s key to know how payments to the company to owners or directors have been shown in the company accounts.

Close a Company and Start Again.

A business can be moved out of a company. This can be part of liquidation.

Only voluntary liquidation can allow this.

Money owed before will not be owed by a new company.

What Will You Need From the Existing Company to Carry On?

What will it need to carry on?

Goodwill is a value put on the soft bits of a business.

This includes the telephone number, the website, customer lists and other items.

Physical items may be needed.

Is There a Best Time to Close and Re-start?

Those owed money will push to get paid. Legal action my set a date to stop.

What about stock levels, ongoing work or contract renewal dates?

What's the Best Process to Follow?

A voluntary liquidation can move a business to a new company.

A court liquidation will not allow that.

A liquidator will set out the steps.

The steps are set out in law. It’s key to go ahead with care.

Have All of the Business Rescue Options Been Explored?

Creditors’ Voluntary Liquidation. This is for a company that can’t pay what it owes.

If a company acts too late it can be closed without a choice. This would be a court process.

Are you aware of all the choices?

Liquidation and rescue options.

Are There Any Debts That Will Survive A Liquidation?

A director or owner will not usually be responsible for money owed.

Personal Guarantee. A director may have agreed to pay what a company can’t pay.

If a director has been lent money from the company; they will owe that back.

It’s key to know how payments to the company to owners or directors have been shown in the company accounts.