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Is this a wind-up?

16 February 2016 / Kevin Slevin
Issue: 4538 / Categories: Comment & Analysis

The implications of the new draft legislation on distributions in close company liquidations.


  • A draft clause 18 in Finance Bill 2016 will introduce a new ITTOIA 2005 s 396B on distributions to shareholders in a winding-up.
  • For a close company being wound up for the avoidance or reduction of income tax after 5 April 2016 distributions received by a shareholder will be treated as dividends chargeable to income tax.
  • A family business wishing to remove their activities from a close company structure needs to consider whether to time any distributions pre- or post-6 April 2016.
  • Changes to the transactions in securities (TIS) provisions take effect from 6 April 2016 but the existing provisions continue for the remainder of this tax year.
  • HMRC has indicated that where a business is succeeded by a shareholder(s) who then trades as a sole trader...

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