You will be aware that one of the advantages of a Members Voluntary Liquidation (solvent winding up) is the ability in many situations for the owners/shareholders to qualify for Entrepreneur’s Relief on the capital distributions made to them as part of the winding up.
However, you may have read an article in The Times on Saturday 18 January 2020 in which Boris Johnson was quoted, from a speech he gave to a group of entrepreneurs in his Uxbridge constituency, that the Treasury was critical of the relief on the basis that “the staggeringly rich were using the relief to make themselves even more staggeringly rich”. In the opinion of The Times this could signal that changes, including scrapping the relief altogether, could be afoot in the forthcoming budget on 11 March.
We think scrapping the relief entirely is unlikely but further restrictions could be introduced such as increasing the rate of tax paid, decreasing the lifetime allowance, extending the time in which shareholdings need to be held and/or increasing the level of shareholding required to qualify for the
What is clear is that even the Conservative Government has this relief on its agenda and it is very unlikely that the relief will be extended and more likely further restrictions will be introduced in time, so if you have any clients who might have recently completed a sale of their business and/or are contemplating the closure of their company, then it might be worth having a conversation with them about accelerating the winding up of their company. If the relief is restricted or scrapped, then it could come in with immediate effect after the Budget and the only way to avoid this is if the company is in liquidation and at least an interim dividend made ahead of this. As always, we would be happy to help and have an initial conversation/meeting with you and your client.
If you require any further information please don’t hesitate to call one of us on the numbers below;
Gareth Roberts 07979 706 392
Lee Lloyd 07773 346 057
Robert Keyes 07500 933 022
Paul Ellison 07967 471 211
David Taylor 07855 231 103