Closing Ltd Co - any additional IR35 investigation risk?

[gadgetman]

I am in the process of closing MyCo as I am no longer in Blighty.

I understand I have to get HMRC agreement on winding the company up - is this at all likely to act as a trigger for them to take a look at my past contracts and possibly start an investigation?

[Sockpuppet]

Even if it does there is nothing that you can do about it. That is unless you were really paranoid and you paid to put the company into dormant status for 7 years then wound it up (£15 a year).

[Gonzo]

I am in the process of closing MyCo as I am no longer in Blighty.

I understand I have to get HMRC agreement on winding the company up - is this at all likely to act as a trigger for them to take a look at my past contracts and possibly start an investigation?

This agreement from HMRC will be to enable you to dissolve the company without going through the full-blown liquidation process, and to apply ESC C16 (you take the proceeds as capital rather than income and pay tax accordingly).

I've done this in the past 6 months and this agreement appears to come from a different part of HMRC than the one that dealt with myCo's other tax affairs (same building but different office) so don't assume that HMRC are that joined-up over it to connect the two.

So far so good for me, but it has only been six months and my 2008/2009 personal SA tax return has not gone in yet. I know that my personal tax return is not linked to myCo's but it is minor milestone and once it is done I shouldn't have to deal with HMRC ever again.

[gadgetman]

Interesting. When you say its only been 6 months - do you mean its still in progress? How long does it take!

I won't have much if anything left in the company coffers as I draw (drew) most of it as salary and divis (after appropriate allocations for tax, VAT etc) each month.

I have some company income for April and salary/divis so will need a PAYE return next year too. Not sure how that VAT works for April though - I have emailed the accountant.

Myco has only being going for less than 3 years and all of my contracts have been quite short (between 3 and 11 months) so I'm hoping I wouldn't be a good target. However logic doesn't seem to play much of a role when it comes to IR35.

[Gonzo]

It took just over two months for HMRC to confirm that they had no objection to the company being dissolved.

Other than that the only reason for keeping the company open at the moment is getting the remaining interest from HMRC on early or over payments. Last week I received a cheque from them for interest up to the company year end last July, and I am not really sure why they think they owed it.

But I did end up paying the final corporation tax bill 9 months early so at the moment I am waiting for the tiny amount of interest for that before closing the company. I don't think HMRC pays interest any more so this may not be a consideration for you.

[ASB]

It took just over two months for HMRC to confirm that they had no objection to the company being dissolved.

Other than that the only reason for keeping the company open at the moment is getting the remaining interest from HMRC on early or over payments. Last week I received a cheque from them for interest up to the company year end last July, and I am not really sure why they think they owed it.

But I did end up paying the final corporation tax bill 9 months early so at the moment I am waiting for the tiny amount of interest for that before closing the company. I don't think HMRC pays interest any more so this may not be a consideration for you.

When I went this route HMRC were quite happy for the CTA to be paid early, the credit interest they repaid to me personally 9 months later. There only proviso was that I should estimate it and include in the capital distribution value or simply put it on my tax return (the latter would have been marginally less tax efficient, but I doubt they would have been quibbling about 20 quid of standard rate on it).

[Hex]

I also got the interest paid to me personally. They sent a cheque to the company. We rang up and pointed out the company didn't exist any more and they sent a new one made out to me.

It does take a while to close the company down. After you've had HMRC approval you then fill in a form to dissolve the company and send it to companies house together with a cheque (for £10 as I recall). They then have to advertise the proposed closure in the London Gazette and wait 3 months before closing. Because of the delay between them receiving the form and posting the notice in the London Gazette, it took over 4 months for me until it was closed. It also seems that they close it at the end of the relevant month which adds a further delay if you sent you form in close to the beginning of a month.