The Treasury has published a consultation which explores the demand for a new Disincorporation Relief.

The Office of Tax Simplification (OTS) has identified a population of businesses which would like to “disincorporate”, e.g. change their legal form from a limited company to self employed status, however, there may be significant tax charges and administrative issues to prevent this.

  • Disincorporation relief in its simplest form might cancel corporation tax charges to the company on the capital gain on the disposal of goodwill or balancing charges relating to plant and machinery and land.
  • A more comprehensive relief could cover charges arising on shareholders in respect of distributed assets but would be subject to anti-avoidance measures. 

The Government is interested in views from a range of audiences, including individual businesses and their representatives to take part in the consultation on disincorporation relief. It is also interested in views from insolvency practitioners reflecting the links to the Companies Act.

Links: HM Treasury Consultation on Disincorporation Relief

Closes: 30 August 2012