Example: a business operator who is forced to temporarily stop his business activity during a period of medical convalescence.
A company that stops its business activity or whose manager/director leaves the company must report the termination of activity to the bodies and authorities to which it is affiliated or with which it is registered and proceed with the dissolution of the company.
The amount of profits distributed is later reintegrated in the calculation of the liquidation proceeds and thereby ensures that all profits distributed after the close of the balance sheet are taxed accordingly.
In the event that the company has a Supervisory Board, this body should approve the shareholders' resolution to dissolve the company.
If your company or organisation ceases trading or business activity, closes down or is forced to close down, you may still have to file Company Tax Returns and pay Corporation Tax during the closing or winding up process.
For capital companies, liquidation proceeds include: The net asset figure to be taken into account at the time of the company's dissolution is indicated in the closing balance sheet of the financial year preceding the dissolution and is the same as that which was used to calculate corporate income tax for that year.
Adjustment: the net assets after the close of the balance sheet of the last financial year are reduced by the amount of profits distributed.
If your company is in the process of being wound up, it’s still subject to Corporation Tax paying and filing requirements.
The winding up of your company for Corporation Tax purposes normally starts on whichever is first: At the start of your company being wound up, your current Corporation Tax accounting period comes to an end and a new accounting period begins.If you’re the director of a limited liability company that goes into liquidation, you face little risk – provided that you’ve acted properly and in good time – but there are a number of consequences that you need to be aware of.When a liquidator is appointed, most of your powers as a director will cease.In the event of liquidation, capital companies and cooperative companies are taxed on the net profits realised during the liquidation.Unlike with partnerships and sole proprietorships, capital companies do not need to make a distinction between the operating profit realised during the year in which the dissolution takes place (current profit) and the profit realised on the termination of activity (liquidation proceeds) as both receive the same tax treatment.In some cases, where you continue not to pay your company’s Corporation Tax, HM Revenue and Customs () will apply to the court for a winding up order to have your company closed down.