Dissolving a company ends its legal existence — but unresolved assets become property of the Crown under bona vacantia. Directors must act carefully to settle assets and liabilities before dissolution, avoiding costly mistakes and lost opportunities.

Dissolving a company is a formal legal process that marks the end of its existence. While this process may seem straightforward, it is essential for directors and company officers to understand the legal and financial consequences that arise once a company is dissolved. In particular, in relation to outstanding assets, liabilities, and the principles of bona vacantia.

A company legally ceases to exist upon dissolution. From that point forward, it can neither undertake activities nor receive assets, including tax refunds. It is therefore the responsibility of the company's directors to ensure that all assets and liabilities are appropriately resolved prior to the dissolution taking effect.

Any assets or rights (excluding liabilities) that remain within the company at the date of dissolution automatically pass to the Crown as bona vacantia, a legal doctrine meaning “ownerless goods.” The management of bona vacantia assets is delegated to different bodies across the United Kingdom depending on the company's location, but all act on behalf of the Crown.

Importantly, only companies that have been formally dissolved fall under bona vacantia. Companies that are in the process of liquidation or being wound up are not yet subject to these rules, as they are still legally in existence. Until dissolution is complete, the company retains ownership of its assets and rights.

In certain circumstances, it may be possible to restore a dissolved company to the Companies Register if the dissolution occurred within the last six years. Restoration would reverse the effects of bona vacantia, reinstating the company’s rights to its previously held assets. However, this process can be complex, time-consuming, and should not be relied upon as a remedy for poor planning.

Following the Spring Statement, HMRC is inviting feedback on the idea of expanding the use of advance clearances for R&D tax reliefs, aiming to reduce errors and fraud, provide businesses with more certainty, and make the overall process smoother for taxpayers.

This R & D clearance consultation will explore whether an advance clearance system could achieve these objectives and how it might be structured. The consultation is open for comments until 26 May 2025, and responses are welcomed from businesses that currently claim or plan to claim Research and Development reliefs, as well as industry groups and agents.

The consultation focuses on three main goals:

HMRC is clear that R&D tax reliefs should be simple to access, predictable, and provide clear assurance to legitimate claimants. This clarity is crucial for businesses to plan effectively and increase their R&D investments. While these goals are separate, they are closely connected.

HMRC acknowledges that the current voluntary R&D 'advance assurance' process hasn’t been as widely adopted as anticipated. The consultation will also look into whether voluntary or mandatory assurances would be more beneficial and outlines the various options under consideration.

In addition, a separate consultation has been launched to explore a new process that would offer increased tax certainty upfront for large-scale projects. This consultation will close on 17 June 2025.