On 6 December 2011, the government decided to legislate ESC C16 in the Enactment of Extra-Statutory Concessions Order 2012.

The effect of this order is that the concession, ESC C16, which currently exists, will change radically from 1 March 2012. With effect from that date, the limit for making capital distributions using the strike-off method will be £25,000. Any distributions beyond that level will be treated as dividends in the hands of the shareholders, i.e. income, leading to an additional tax liability for higher-rate taxpayers (see HMRC’s impact note on this, here). If a company enters into a Members' Voluntary Liquidation, then the £25,000 limit does not apply and all distributions will be treated as capital.

Our fees for dealing with a Members’ Voluntary Liquidation start at £2,000 plus VAT. For further information or advice, please contact Robert Gibbons on 01827 60020.