closing ltd company

[TechJinx]

Hi all,

going to ask the accountant for the formal answer but as I;ve been offered a pretty decent perm job im considering closing the company and taking it. Does HMRC count as a formal creditor for tax that will be owed at the point of closure? Just wondering what it means to simply dissolve the company. Do you file a final return and have to pay up to that day or is it last years filing?

also any other pitfalls to simply closing the thing?

Thanks in advance

[northernladuk]

How much money do you have in the bank. Over 25k and you might want to go down the MVL route? If so you might want to speak to Chris Maslin at MVLOnline. He posts on here.

Process is here.
Strike off your limited company from the Companies Register: Close down your company - GOV.UK

Your accountant is the best person to go through the details with you.

[TechJinx]

To be honest hardly anything as I take everything out - It's probably not been the most tax efficient but I dont trust a future government not to make it even harder to release funds - so it all comes out and goes int he ISAs.

a few k and tax liability. Presume the tax liability will chase the director even though it should stay with the company if you shut it down?

[northernladuk]

Eh?

[BrilloPad]

a few k and tax liability. Presume the tax liability will chase the director even though it should stay with the company if you shut it down?

HMRC are very relaxed about that sort of thing. Loads of contractors just close down the company owing HMRC. HMRC never slap on enormous penalties. Courts don't impose custodial sentences.

Was that actually a serious question. If it really was you can have a serious answer. Pay HMRC before anyone else. Don't even think about messing with them.

[doconline]

Am in pretty much the same situation. Spoke to my accountant and they said its pretty easy. Just do a normal end of year (mine is coming up anyway). Pay any outstanding corporation tax, vat etc if applicable. They then take over running the company for a small fee (£100 in this case). They have to put a notice in a paper to say the company is closing and any parties with potential can then come forward. About 3 months later, company is closed.

I wanted to go this route because of the phoenixing issue of coming back to contracting if i didn't like permie job.

[northernladuk]

To be honest hardly anything as I take everything out - It's probably not been the most tax efficient but I dont trust a future government not to make it even harder to release funds - so it all comes out and goes int he ISAs.

a few k and tax liability. Presume the tax liability will chase the director even though it should stay with the company if you shut it down?

A bit more explaination here.

[northernladuk]

I wanted to go this route because of the phoenixing issue of coming back to contracting if i didn't like permie job.

Something isn't right here? I'm not sure why you've brought phoenixing in to it? That's only really a problem if you've gotten rid of the old company to dodge any liabilities or guarantees which you haven't. You've a perfectly reasonable excuse when you went permie and it didn't work. No issues there.

That aside I don't get your thinking. What do you mean by going down this route because of phoenixing? To avoid phoenixing you should be keeping it open surely. Shutting it and opening a new one is (but it isn't as I've explained) would be closer to phoenixing? Anyway, it's a non issue now, just wondered why you were thinking.

There might be an issue if you'd used MVL and gained a tax advantage closing it down. You can't re-open a new one for a couple of years in that case but you've indicated that's not required in your situation.

[Maslins]

If your company's final balance sheet position is that it can't afford to pay its taxes then presumably one of the following has occurred:
- you've taken illegal dividends, so these should be paid back to the company so it can then pay the creditors.
- you've taken a director loan, which should be paid back to the company so it can then pay the creditors.
- the company genuinely made a trading loss in the last year or more (before dividends are considered). In this situation you can potentially try to close it without paying the final company taxes.

[Hobosapien]

A bit more explaination here.

Yep, if DIY rather than needing MVL it's a simple and relatively painless process:

1. Inform accountant so they can prepare final accounts. This may include changing the company year end date to extend the period covered so only one set of accounts needs preparing. They will also arrange closure of any PAYE scheme.

2. Cancel VAT registration and submit final VAT return and make any final payment.

3. Pay all bills (Corp tax, accountant fees).

4. Transfer remaining cash from Ltd company bank account after discussing with accountant what route to take for final distribution. e.g. Entrepreneur Relief or final divi, taking into account CGT allowance and divi tax.

5. Close bank account. Ensure have obtained copy of final statement(s) for future reference.

6. Inform Companies House of proposal to strike off using form DS01. You will receive a letter from them about the due process and expected completion (usually at least 2 months from them receiving the form), then another when the company has been dissolved, which can be checked via their WebCheck service to make sure all paperwork in order and a 'D' is shown alongside the company.

7. Pay any personal taxes for the final distribution via next self assessment.

Sorted.