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Distributions as part of a liquidation normally taxed via CGT would instead be taxed as dividends if all the following conditions are met: A will realistically apply to the vast majority of the situations I’m thinking of, being a small owner managed company that’s cash rich, coming to an end and being liquidated. There may be many reasons for liquidating a company, but cynic in me thinks where the tax treatment is beneficial when compared to dividends, it’s likely HMRC could argue this point does apply regardless of what other genuine motives there may have been.
B is open to interpretation as to exactly what counts as “a similar trade or activity”. If you plan to use an MVL to get cash out tax efficiently then immediately restart a new business doing exactly the same thing, then yes!
Basically the already existing anti avoidance legislation transactions in securities is being beefed up a bit.The court’s focus will be to examine the circumstances at the time the contract was entered into and not at the time of the breach.To improve the chances of the clause being seen as a genuine pre-estimate of loss, you should ensure that there are contemporaneous records that evidence the basis upon which the liquidated damages is calculated.For more information on the If acting for the party subject to dependencies, review the dependencies carefully to ensure they are reasonable, achievable (without reliance on any third party) and as limited in scope and number as possible.
damages clause might be found to be an unenforceable penalty can be mitigated, or eliminated entirely if it is restructured as a contractual payment as opposed to a payment for damages in respect of a breach of contract.
Ie if you liquidate today and set up a new company doing a similar thing in 18 months time, be warned you could see those liquidation distributions taxed on you as dividends rather than capital gains.