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Why selling a company is not tax avoidance

19 February 2019 / Pete Miller
Issue: 4684 / Categories: Comment & Analysis
Misplaced spotlight

Key points

  • Proceeds from a winding up of a company are chargeable to capital gains tax unless specific conditions apply when income tax will be due.
  • Spotlight 47 targets schemes that try to avoid the phoenixism TAAR by selling to a third party.
  • Taxpayers may prefer to sell a company with undistributed reserves to be sure of the tax treatment.
  • How can the GAAR apply to a company that has been sold rather than placed in liquidation?
  • The TAAR applied only to transactions involving a company winding up.

HMRC published Spotlight 47 Attempts to avoid an income tax charge when a company is wound up on 4 February 2019 ( Being a slightly late riser that day – it was after all the day after the Super Bowl – I did not see it until I received emails from three people drawing my attention to it.

Having read it I immediately felt that...

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