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The Budget 2007 changes may put disincorporation on the agenda for many small businesses, warns PETER RAYNEY
KEY POINTS
- Incorporation may have been more trouble than it is worth.
- Difference between a members' voluntary liquidation and dissolution.
- Dealing with corporation tax consequences of disincorporating.
- Capital gains tax arises when assets are transferred to the shareholders.
- Potential double-tax charge.
For some years Gordon Brown moulded a tax regime which drove many small businesses to incorporate. Indeed after the introduction of the corporate nil-rate band in 2002 even small tradesmen taxi-drivers milkmen and other one-man-bands were queuing up to register as a company. Then in 2004 Dawn Primarolo said that it had all gone much too far and something had to be done. We then had to endure the non-corporate distribution rate debacle which (thankfully) is now firmly consigned to the legislative dustbin.
Nevertheless our...
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