UK200Group comments on reports that many small businesses are considering liquidation
A member of the UK200Group of independent accountancy and law firms has commented on reports that many small businesses are considering liquidation to minimise their tax liabilities.
A report in the Financial Times has said that thousands of small company owners may liquidate their companies in the coming months amid concerns that an imminent tightening of the tax rules will more than triple their tax bills.
It comes after HM Revenue & Customs releases a new consultation document towards the end of last year, which laid out proposals to prevent people misusing Entrepreneurs Relief to extract money from their business. This new consultation comes on the back of measures made in last year’s Summer Budget that will restrict the tax benefits of taking money from a business in the form of dividends.
Duncan Montgomery, tax partner at UK200Group firm Whittingham Riddell, said:
“A rush of liquidations to pre-empt a crackdown seems at this point unlikely. The Dividend tax, if properly planned around does not have to be paid for most people.
“If however, a business has reached the end of its life, or the trade has been sold, then perhaps liquidation offers a way through. In those circumstances timing and proper paperwork are key to achieving that rate of tax.”
