Introduced in the 2016 Finance Bill and taking effect as of 6th April that year, Targeted Anti-Avoidance Rules (TAAR) legislates against the act of falsely reducing tax liability by disposing of shares through a winding up procedure rather than extracting the retained profits as dividends and paying the associated tax.
The regulation was set up to combat aggressive and repetitive tax avoidance activity yet has the potential to impact legitimate Members’ Voluntary Liquidations (MVLs). RBR Advisory’s team of industry-leading professionals can guide you towards ensuring the distributions made in the winding-up of a solvent company remain compliant of this ruling.
Our specialist advisory team can highlight key considerations when it comes to managing your exit from a company without contravening regulations. As part of the process we can explore whether there would be adequate justification for selling the profitable business as a going concern as opposed to winding it up and also consider whether your future plans may unwittingly find you in breach of TAAR.
We will ascertain the reasons behind your desire to cease trading and will provide sound advice on whether any new company you may be anticipating setting up would be viewed as an act of phoenixing in the eyes of the law.
MVLs are a perfectly legitimate means of bringing about the end of a solvent company, however, caution must be exercised and professional advice sought before proceeding. TAAR does not aim to prevent companies utilising this procedure, but rather ensure the associated tax advantages are only enjoyed by those lawfully entitled to benefit from them.
Our team of experts will establish the appropriateness of an MVL and demonstrate the commercial reasoning behind this procedure being chosen before going ahead.