Disincorporation – what does a small business need to consider?

If a small business wants to disincorporate – change their legal form from a limited company to self employed status – then it is important for them to be clear on what is involved within the process.


After much deliberation surrounding the process of disincorporation, and a widespread discussion which included the views of insolvency practitioners, a brand new disincorporation tax relief was introduced on 1st April 2013.


The key aspect of the relief is that businesses will not face as many tax barriers as they would have previously when attempting to transfer business assets to shareholders who plan to keep the business running as a going concern.


When did the relief begin?


1st April 2013 marked the point at which the relief was available, and companies can make use of it for a total of 5 years.


One of the more interesting aspects of the new structure is that there are no specific rules over how long a business needs to have existed in order to take advantage of it. This means that businesses which have been running for just a few years will be able to take this route if their circumstances have changed sufficiently. At Moorfields, we have a corporate simplification department which deals with all manner of queries on the subject of disincorporation.


It is worth noting that there a few key conditions which a business must meet in order to make use of the relief. These include the fact that:

  • A company must transfer its business to some or all of the shareholders of the company
  • The transfer of the business must be a qualifying business transfer
  • The business must be transferred within 5 years after 31st March 2013


Insolvency specialists


Insolvency advice specialists Moorfields can assist your business with the process of disincorporation. They have a specific corporate simplification department that can provide expert guidance and advice in this area.


Moorfields can also provide leadership to companies who find themselves in financially distressed situations, assisting business leaders within an unstable economic climate.


If you would like to have a free no obligation chat with one of our advisers please call us on 0207 186 1143.

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