Shutting down Ltd Company triggering HMRC Investigation?

[MoroccanMole]

Anybody on the forums have any experience of this actually happening?

It seems to get mentioned in a lot of articles on the subject of closing, flagged as a major risk.

[cojak]

I think this is in relation to starting up and closing multiple companies. You need HMRC’s permission to close a company, and 99% of the time provided you have paid your corporation tax and your paperwork is in order they will give it.

[Maslins]

With my MVL Online hat on, we haven't seen a single HMRC enquiry started on a company after it's been put into liquidation.

If there's already an enquiry and/or your company tax affairs are currently in a mess, putting the company into liquidation isn't a magic bullet to fix it.

[Hobosapien]

You need HMRC’s permission to close a company, and 99% of the time provided you have paid your corporation tax and your paperwork is in order they will give it.

Just to clarify, the closing down via a normal strike off process (not MVL, never done one of those so not sure about it) involves several steps where HMRC are notified that the company is being dissolved by the way of normal procedure for closing PAYE scheme, de-registering for VAT, submitting final accounts, and paying final corp tax bill.

There is no need to ask for specific permission from HMRC as a separate step, the request to strike off the company (via DS01 form) is handled by Companies House, so as long as the company accounts are in good order and the correct process of dissolving the company is followed (with the aid of an accountant to ensure the right documents and notifications are filed) then unless HMRC were already lining up the company for an investigation there should be little to worry about and the normal process will be followed.

i.e. I had correspondence from Companies House regarding the closure but nothing from HMRC, presumably they were happy with what my accountant provided to them and the state of the company on their systems and the final corp tax payment.

So don't worry that you have to engage HMRC in a request for permission to close and they'll come back asking for a reason why and history of the company, as they won't unless they decide to investigate and they'll send you a letter saying they intend to do that (and what they are specifically interested in) so worry about it if you ever get that letter.

Claiming Entrepreneurs relief requires permission from HMRC. Not done that so can't give any feedback on that process.

[northernladuk]

What's the reason you are wanting to close? Genuine reason because you are going permie or are you in a situation you believe HMRC is eyeing you up? Are you a GSK bod?

[cojak]

Just to clarify, the closing down via a normal strike off process (not MVL, never done one of those so not sure about it) involves several steps where HMRC are notified that the company is being dissolved by the way of normal procedure for closing PAYE scheme, de-registering for VAT, submitting final accounts, and paying final corp tax bill.

There is no need to ask for specific permission from HMRC as a separate step, the request to strike off the company (via DS01 form) is handled by Companies House, so as long as the company accounts are in good order and the correct process of dissolving the company is followed (with the aid of an accountant to ensure the right documents and notifications are filed) then unless HMRC were already lining up the company for an investigation there should be little to worry about and the normal process will be followed.

i.e. I had correspondence from Companies House regarding the closure but nothing from HMRC, presumably they were happy with what my accountant provided to them and the state of the company on their systems and the final corp tax payment.

So don't worry that you have to engage HMRC in a request for permission to close and they'll come back asking for a reason why and history of the company, as they won't unless they decide to investigate and they'll send you a letter saying they intend to do that (and what they are specifically interested in) so worry about it if you ever get that letter.

Claiming Entrepreneurs relief requires permission from HMRC. Not done that so can't give any feedback on that process.

Oh, right you are. I went through the MVL route.

[CompoundOverload]

There are other things to consider, such as how much is left in the business.

If you have < £25k I think you strike off the company and it's quite straight forward. > £25k then that's when you would go down the MVL route and seek ER?

So that is the first thing to consider before proceeding.

[MoroccanMole]

What's the reason you are wanting to close? Genuine reason because you are going permie or are you in a situation you believe HMRC is eyeing you up? Are you a GSK bod?

Reason for closure is nothing untoward.

Of our two fee earning Directors, (myself and my partner), my partner got offered a decent permie position with a different company outside of London.

I called time on our other professional services contract and decided to follow her back home to the North West. This was at the end of last year.

Have since found another freelance gig which I took Umbrella in light of April 2020 IR35 tax changes and the fact I might stick it their for a while as it's close to home.

LTD company hasn't earned any fees since last year - now both of us are in PAYE employment. HMRC have won I guess!

Going through the process with our accountant to close our Ltd now, sorted the VAT and Corp Tax etc. Will have less than £25k in assets once we settled debts which is the magic threshold I am told.

My question relates to if closing the Ltd will bring the company into HMRCs radar in anyway that they might be prompted to ask a question or two. Articles dotted around the internet say it could raise a flag, but the same 'articles' then go on to try to sell Contract Previews/Insurance etc..

Wondering what's the reality, anybody here have experience in issues when closing down?

I have questioned my accountant if HMRC requires a formal letter to be sent to them. The last CT600 was filed and tax paid, although nothing in the information sent specific in stating Ltd was ceasing trading. It was the reason stated for the VAT however.

No connection with GSK. Separate industry entirely.

[Maslins]

My question relates to if closing the Ltd will bring the company into HMRCs radar in anyway that they might be prompted to ask a question or two. Articles dotted around the internet say it could raise a flag, but the same 'articles' then go on to try to sell Contract Previews/Insurance etc.

I think your cynicism may be justified.

Inevitably accountants are going to be nervous about categorically stating you will not get an investigation following an application to close (regardless of strike off or MVL). We don't know what HMRC might be thinking about doing any better than you.

Assuming your accountant has helped you through all the normal steps (de-registering for VAT/PAYE, submitting final CT return etc), and there aren't any really contentious figures in recent submissions, I don't see any reason why HMRC would launch an enquiry. Yes there is the argument that if they're already considering it, it's far easier for them to launch an enquiry just before your company is legally dissolved than just after. However, the number of enquiries are tiny relative to the number of companies, and I've seen no evidence of closures triggering enquiries.

[CompoundOverload]

I think your cynicism may be justified.

Inevitably accountants are going to be nervous about categorically stating you will not get an investigation following an application to close (regardless of strike off or MVL). We don't know what HMRC might be thinking about doing any better than you.

Assuming your accountant has helped you through all the normal steps (de-registering for VAT/PAYE, submitting final CT return etc), and there aren't any really contentious figures in recent submissions, I don't see any reason why HMRC would launch an enquiry. Yes there is the argument that if they're already considering it, it's far easier for them to launch an enquiry just before your company is legally dissolved than just after. However, the number of enquiries are tiny relative to the number of companies, and I've seen no evidence of closures triggering enquiries.

Presumably, an MVL is more likely to produce an enquiry (if one was to happen) than say a strike off, purely because of the amounts left in the business?