Due to concerns over changes expected to be brought in by the Finance Act 2016 the government is bringing in a new set of rules and regulations to prevent business transactions which are ‘tax rather than commercially driven’.
It is expected that in April tax on dividends will increase and the government is concerned that in return more individuals will rearrange their affairs to take advantage of the lower rates of Capital Gains tax on income instead. As part of this the government is set to tackle ‘Moneyboxing‘, ‘Phoenixism’ and in a lesser scale ‘Special Purpose Companies’.
Following the introduction of the Finance Act 2016 in April, if within a two year period of a solvent liquidation (MVL) the shareholder proceeds to trade in similar activity and it is deemed that the main purpose of the MVL was to benefit in tax, the distribution will be treated as income for tax purposes.
If you are thinking of placing your company into solvent liquidation, or need advice in respect of any formal insolvency issues, please do not hesitate to contact us on 01616 966 229.
Comments