We are going through a tough time and there is a risk that so many businesses might have to close down; it will be useful to explain how the final distribution would work for directors and the business.
https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm36220
The Extra Statutory Concession (ESC) – C16 was a well-used extra-statutory concession that allowed company directors to treat final distributions as a capital disposal and close down their business in an efficient manner. ESC C16 was withdrawn in March 2012 and replaced by s1030A Corporation Tax Act 2010 (CTA 2010) provisions.
This move meant that from 1 March 2012, the concessionary treatment provided by ESC C16 were replaced by more restrictive statutory rules which included the introduction of a new £25,000 threshold.
Under the legislation, distributions made in anticipation of dissolution under the striking off process will not be taxed as ‘income’ distributions provided:
Directors with more than £25,000 of reserves will not be able to treat the final distribution as a capital disposal but rather as ‘income’ distributions.
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Conditions of ESCC16
(a) it does not intend to trade or carry on business in future, and
(b) it intends to collect its debts, pay off its creditors in full and distribute any balance of its assets to its shareholders (or has already done so), and
(c) it intends to seek or accept striking off and dissolution.
(a) they will supply such information as is necessary to determine, and will pay, any CT liability on income or capital gains, and
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