Tax on a liquidating distribution
However, where a transaction falls on or after 6 April 2016, any clearance granted by HMRC under the current TIS rules will no longer be valid – so a new clearance would need to be sought under the new rules.Therefore, it is preferable for winding-ups to be completed before 6 April 2016 where this could be problematic. This change will allow for HMRC to target ‘money boxing’ (where excess profits are retained in the company and extracted by way of capital on a liquidation) and ‘special purpose companies’ (where individual projects or contracts are carried out by separate companies so that on completion, they can be extracted by way of capital on a liquidation, instead of the extraction of regular dividends).By continuing to use our website, you agree to our use of such cookies.The South African Revenue Service (SARS) released Binding Private Ruling 210 (Ruling) on 11 November 2015.
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This specifically targets ‘phoenixism’, where profits are retained within a company, the company is wound up (with the individual shareholders benefiting from capital treatment), followed by any of the individuals setting up a business carrying on the same or similar trade or activity within two years of the winding up.