Liquidating a limited company
The striking off of a company from the Register of Companies can be voluntary or involuntary.There are two forms of company strike off involving striking the company off the Register of Companies at the Companies Registration Office (CRO)-voluntary and involuntary. Section 311 of the Companies Act 1963 allows the Registrar of Companies to remove companies from the Registrar as part of an administrative voluntary strike off scheme operated by the Companies Registration Office (CRO).As you can imagine for the right individual the tax savings by having the distribution treated as capital could be significant.A further complication is that the capital distribution can only occur if the company is liquidated.
It is important to note that a company that is struck off, whether voluntarily or involuntarily ceases to exist as a legal entity.
This is quite common, especially with consultancy businesses where cash is retained in the business and built up.
The business is then closed to extract the cash as capital and a new consultancy company set up.
Many business owners have over the years built up real value in their limited companies.
Some will sell their businesses but many will simply close their companies down and distribute what monies are left in the company to shareholders.