A private company that is not trading and meets other conditions may be dissolved by being struck off the Register of Companies. The main advantage of the directors applying for strike off is that it is likely to be cheaper and quicker than liquidation, but there are risks: remaining assets may be lost or a creditor may object.
Where the total capital to be returned to the shareholders is less than £25,000, capital up to this figure may be returned to the shareholders in anticipation of a strike off and will be treated for tax purposes as a return of capital. Where there is capital of more than £25,000, an MVL must be used.
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