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Liquidation

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    Liquidation

    Hi All,

    I am mid contract.

    My year end is the end of the month.

    My accountant is old and not geared up for contracting. Recently a mistake on his part (which is one of many over the last two years) has really got me very angry, to the point were now not talking.

    My questions is, can I/should I liquidate my company at year end and start fresh with a new company/accountant.

    Will this.

    1. Make my current recruiter unhappy/difficult, invoicing from another company?
    2. Make the tax man unhappy that I will pay capital gains at 10 percent not corporation at 20 percent?

    And if i do liquidate, what are the time scales like, do I have to notify HMRC by the end of this month (year end), for example.

    The company will have less than 25K in it, at the point of liquidation.

    Although there is an obvious benefit of paying less tax, I really have no confidence in the accountant, and requests for a copy of my entire file/books have not been responded to, so I really want to cut all ties.... as I cant check for other mistakes that may have been made.

    Starting fresh, appears a sensible route, agreed it has a small financial intensive...

    Any thoughts, advise or corrections would be welcome.

    Many thanks

    #2
    You can change accountant without liquidating. This would be an enormous headache for no good reason imv. Unless there is a good reason?

    Comment


      #3
      But yes, you can do it. Agency not likely to care.

      Comment


        #4
        Originally posted by Alan @ BroomeAffinity View Post
        But yes, you can do it. Agency not likely to care.
        But OP can't get the tax relief if forming new company to continue in same trade.

        Switch accountants - no need to wind up company.

        Comment


          #5
          Originally posted by mudskipper View Post
          But OP can't get the tax relief if forming new company to continue in same trade.

          Switch accountants - no need to wind up company.
          Agreed. But this isn't his motivation.

          Comment


            #6
            Hi,

            By tax relief do you mean the 10 percent not 20?

            AS my accountant never gave any indication of any other tax relief, other than expenses...

            He even alluded to it being normal practice to wind up a company when it has lots of capital in the bank and start another...

            I am a bit clueless, hence why wanting to move accountants...

            Comment


              #7
              Thanks for your reply's btw, they are appreciated.

              I have two motivations if I am honest.

              I am facing a corporation tax bill of 13K for 15/16, with only 10 weeks work remaining, my confidence is low on obtaining another contract quickly, this maybe a mental thing opposed to reality, as I am getting better at contracting.

              So, cutting my corporation tax bill by half would be handy, ready to hibernate and keep the bill paid until I get my next contract, how ever i like to sleep easy as well, hence wanting to change accountant, to insure everything is done by the book.

              So changing accountant and winding up my company would be win win, starting fresh and halving my corporation tax bill... how ever i would need to continue working/invoicing until the end of April. Umbrella?

              As mentioned, I want to sleep easy, but if there is a way to maximise my tax efficiency then I am very much up for that.

              Thanks again

              Comment


                #8
                Liquidation wouldn't effect your CT bill.

                It **may** effect personal bills.

                My advice: start over with another accountant. If you are worried about the performance of your existing accountant, ask the new accountant to do a high level review of previous years, which shouldn't be to difficult for a PSC type arrangement.

                Comment


                  #9
                  My current accountant ran two payrolls in one year...

                  One for my outgoing sole trader company and one for my LTD company, this is the primary error... As the sole trader company didn't trade in this time and the limited was created only 5 weeks into that financial year... It seemed obvious one would replace the other, being an IT contractor as I am. I raised this in the October after... and thought it was dealt with, now nearly 18 months later I am getting letters from HMRC for more tax, NI payments etc... it wasn't until I started digging that I found the problem of two pay rolls being run hadn't been rectified...

                  This has lead to a stale mate with the accountant...

                  Im not sure how easy it is to retract a payroll from closed years???

                  And god knows what other mistakes he has made...

                  Comment


                    #10
                    I thought when you liquidated the remaining profit was charged treated as capital gains, not corporation tax??

                    Thanks again

                    Comment

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