Administrated Dissolution - A good way to close limited company? Administrated Dissolution - A good way to close limited company?
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  1. #1

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    Default Administrated Dissolution - A good way to close limited company?

    I was a Limited Company contractor before IR35 but now working PAYE Umbrella for the same employer.

    I want to get rid of my limited company as I doubt I will be using it again, and I have two options:

    Option 1 suggested by my existing accountant: Pay for them to do my final accounts, pay the Corportation Tax that I owe, and leave it there.
    - This will cost a few hundred.

    Option 2 suggested by 'Future Strategy': perform an 'Administrated Dissolution', do not pay the Corportation Tax tax that the limited company owes, and save myself several thousand.

    It suffices to say that Option 2 is tempting! Here is how it was explained to me:

    - The company is closed
    - The Limited company PAYS NO CORPORATION TAX (the cash that Isaved in my business acct is paid out in dividends instead)
    - The company's creditors (HMRC) are notified that the debt due will not be paid.
    - They will dispute this, and there will be nothing that they can do.
    - There are zero reprecussions in terms of other limited companies, personal credit history, etc. UNLESS open essentially the same limited company to continue contracting (this would be a 'phoenix' company rising from its own ashes that would be illegal). So this is a one-time thing for those coming off of IR35.
    - I am not sure if me continuing to work for the same employer under Umbrella PAYE or as a Permanant employee will count as a 'Pheonix company activity'? Will an Administrated Dissolution prevent me from working in the sasme industry?
    - The guy says this is entirely legal, and that the changes of a retrospecive ruling forcing me to pay up in the future (similar to Loan Charge I saw in the news) is remote.

    The website looks good:
    Future Strategy

    Trustpilot reviews look good but only go back a year:
    Future Strategy Reviews | Read Customer Service Reviews of futurestrategy.co.uk | 2 of 4

    Any advice that seasoned Contractor Accountancy experts can share would be appreciated!
    Last edited by cojak; 24th October 2020 at 11:15. Reason: Removed links

  2. #2

    Some things in Moderation

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    Quote Originally Posted by sombradonkey View Post
    I was a Limited Company contractor before IR35 but now working PAYE Umbrella for the same employer.

    I want to get rid of my limited company as I doubt I will be using it again, and I have two options:

    Option 1 suggested by my existing accountant: Pay for them to do my final accounts, pay the Corportation Tax that I owe, and leave it there.
    - This will cost a few hundred.

    Option 2 suggested by 'Future Strategy': perform an 'Administrated Dissolution', do not pay the Corportation Tax tax that the limited company owes, and save myself several thousand.

    It suffices to say that Option 2 is tempting! Here is how it was explained to me:

    - The company is closed
    - The Limited company PAYS NO CORPORATION TAX (the cash that Isaved in my business acct is paid out in dividends instead)
    - The company's creditors (HMRC) are notified that the debt due will not be paid.
    - They will dispute this, and there will be nothing that they can do.
    - There are zero reprecussions in terms of other limited companies, personal credit history, etc. UNLESS open essentially the same limited company to continue contracting (this would be a 'phoenix' company rising from its own ashes that would be illegal). So this is a one-time thing for those coming off of IR35.
    - I am not sure if me continuing to work for the same employer under Umbrella PAYE or as a Permanant employee will count as a 'Pheonix company activity'? Will an Administrated Dissolution prevent me from working in the sasme industry?
    - The guy says this is entirely legal, and that the changes of a retrospecive ruling forcing me to pay up in the future (similar to Loan Charge I saw in the news) is remote.

    The website looks good:
    Future Strategy

    Trustpilot reviews look good but only go back a year:
    Future Strategy Reviews | Read Customer Service Reviews of futurestrategy.co.uk | 2 of 4

    Any advice that seasoned Contractor Accountancy experts can share would be appreciated!

    Quote Originally Posted by sombradonkey View Post
    The guy says this is entirely legal, and that the changes of a retrospecive ruling forcing me to pay up in the future (similar to Loan Charge I saw in the news) is remote.
    Remote? REMOTE?

    Is ‘this guy’ a tax barrister? Has he given you a written confirmation from HMRC saying that they won’t close this?

    Have you checked that this is even legal for your situation?

    Or does a Shark see a gullible ex-contractor that said shark can take money from without consequence (to the shark, obviously)?

    (Although I’m sure that you aren’t gullible, are you?)

    So many questions...

    Oh, and I dont think TrustPilot reviews are worth spit.
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
    - Voltaire/Benjamin Franklin/Anne Frank...

  3. #3

    Godlike

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    It sounds too good to be true.

    Go and have a read over here for tales from people who went for a wheeze that was too good to be true. https://www.contractoruk.com/forums/...eme-enquiries/
    See You Next Tuesday

  4. #4

    Should post faster


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    This guy does not understand what the office receiver or any liquidator would do...

    Unless you have no Uk assets and can disappear quickly if needed you are insane.

    In short he is suggesting taking assets out and leaving the company with debts to hmrc. This has been tried before and liquidators will sue you personally

    Complete non starter

  5. #5

    Double Godlike!

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    Wouldn't it go against your role as a director to fail to pay the company's liabilities and instead run off with the cash?

    Go for it, let us know how it all works out...

  6. #6

    Double Godlike!

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    Start with the basics. HMRC won't allow you to close a company that owes them money. So your advisor is either an idiot or a shark...
    Blog? What blog...?

  7. #7

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    Total nonsense. Any such dividend would be ultra vires and easily reclaimed from you personally, end of story.

  8. #8

    bored now

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    Oh joy the phoenix company approach to avoid solving dodgy work and court demands has arrived in the contracting industry.

    Just close the company down properly - if you adopt future strategy's approach it wouldnt surprise me if you became HMRC's first outside to inside IR35 case with HMRC keeping the company open so they could really make you suffer.
    merely at clientco for the entertainment

  9. #9

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    Quote Originally Posted by NowPermOutsideUK View Post
    This guy does not understand what the office receiver or any liquidator would do...

    Unless you have no Uk assets and can disappear quickly if needed you are insane.

    In short he is suggesting taking assets out and leaving the company with debts to hmrc. This has been tried before and liquidators will sue you personally

    Complete non starter
    Hi,

    Isn't the entire purpose of a Limited company that the financial liability is limited to the comany structure and doesnt endanger the owners personally?

  10. #10

    bored now

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    Quote Originally Posted by sombradonkey View Post
    Hi,

    Isn't the entire purpose of a Limited company that the financial liability is limited to the comany structure and doesnt endanger the owners personally?
    Only if the director isn't the person creating the issue and the organisation being short changed is not called HMRC.
    merely at clientco for the entertainment

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