CTM36205 - Particular topics: company dissolution: distributions prior to

Companies that cease business may wish to save the costs etc involved in the formal winding-up procedure under the Insolvency Act 1986. They can do this by either:

• asking the Registrar of Companies to strike the company off the Joint Stock Companies Register and so dissolve it under Section 652 Companies Act 1985,

or

• becoming inactive and waiting to be so struck off and dissolved.

Dissolution under Section 652 is not considered to amount to a winding-up under the Insolvency Act. You should not refer to it as a winding-up, nor as an 'informal liquidation'.

Such companies normally pay off their creditors and distribute the remaining assets to their shareholders. As there is no winding-up, ICTA88/S209 (1) does not apply and these distributions normally fall within ICTA88/S209 (2)(b) and (4) (see CTM15250 and CTM15350). For distributions made prior to 6 April 1999 ACT will be chargeable, normally by assessment under ICTA88/SCH13/PARA7 (4) (see CTM22100 and (b) of AC4500). These provisions should not, however, be applied where the arrangements described in CTM36220 to CTM36240 can be made with the company and its members.

Where a company other than one having a share capital proposes to distribute its assets and seek or await striking off, the case should be submitted to CT&VAT (Technical).

Where a notification is received that a company may be struck off the Joint Stock Companies Register, see AC1350 onwards, INS2303 and INS6104.