Are you ready for an exit? Have you completed a development, need to divide a property portfolio between stakeholders or ready to retire?

There are a number of situations and reasons for using an insolvency practitioner to wind up your solvent business which will be to your advantage. The most usual scenario is where developers have used a limited company for a joint venture and the development has been completed and sold. All liabilities have been paid and now the company simply holds cash to be paid out to the shareholders.

A solvent Liquidation is also used for winding up a business after sale or retirement. Landlords for example, may sell a portfolio of properties which are held in one or more limited companies, or perhaps partners in a business which holds multiple investments properties wish to go their own way and need to divide the portfolio in a tax efficient manner. This type of business reconstruction can be facilitated by an insolvency practitioner working with accountants and solicitors to the benefit of the shareholders.

Extracting the funds as dividends or as salary will attract high rates of personal tax, but by using an insolvency practitioner to wind up the company, the funds are paid out as capital distributions, thereby attracting a lower rate of tax, possibly as low as 10% depending on personal circumstances.

It is often assumed that an insolvency practitioner is only suitable for situations where businesses or individuals are unable to pay their debts, but in a solvent liquidation as above all debts are paid, including HMRC and employees, and there are no negative impacts for Directors or shareholders.