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Closing a company

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    Closing a company

    Hi

    I was a contractor but recently took a permi role, however, I will start looking for a new contact in the New Year or sooner. Can anyone recommend if I should close my company or suspend it for the period I am permi.

    Thanks

    #2
    No need to do either, you're just not doing any billable business at the moment
    Coffee's for closers

    Comment


      #3
      I'm considering something similar. If you become a permanent employee then do you have to issue yourself with a P45, or is it possible to remain an employee of your own company in parallel with your permie job?

      Comment


        #4
        Hi NUI & kess

        The decision on closing your company really depends on whether you will be contracting through it at a later date. If you suspect you may, then it would probably be better to keep it dormant and save the hassle of incorporating a new one later.

        If in your current financial year you have traded and stop trading; then you are 'not trading', not dormant. To be dormant, you have to have not traded in the whole financial year. With a dormant company you are still required to file a set of dormant accounts which is relatively easy to complete.

        One thing worth mentioning here. All companies house returns and paperwork need keeping up to date for both dormant and 'not trading' companies. If you failed to file the annual return, CH could make an application to strike the company off the register.

        If that happened, any money in the company becomes the property of the crown!
        It is possible to restore a company and retrieve the money, however it is a laborious, time consuming and costly excercise; one to definitely avoid

        The process to close the company can take quite a few months before it is struck off the register. The accounts need to be filed, (CT, VAT and PAYE and creditors paid) and CH paperwork has to be up to date before the form 652a (may have changed from 1/10/09 but I couldn't find it on CH website) is submitted as an application to strike a company off the register. The application is then advertised in the London Gazette, and if not opposed to, the company will be dissolved.

        Whilst you are doing permie work, you will need to P45 yourself as an employee from your company. Your new employer will need this.

        You still remain a Director of your company even though you are not employed.

        Comment


          #5
          You don't need to give yourself a P45. In any event you shouldn't issue a P45 unless you quit the company. The employer will requests a tax code via (I think) a P46. This should be either BR or your standard tax code and then your company should be notified of the change to your tax code (generally they will do BR and it is then up to you to transfer you allowance). Of course none of this make any difference to the amount of tax you pay since that it cumulative across all employment, but it does make a difference as to when you pay it.

          Comment


            #6
            Originally posted by ASB View Post
            Of course none of this make any difference to the amount of tax you pay since that it cumulative across all employment, but it does make a difference as to when you pay it.
            It does however also make a difference to the amount of NI you'll pay.

            There's arguments either way, but I think (unless you're convinced you'll never use the company again) you're best off keeping the company, and remaining an employee at the NI upper earnings threshhold. This will either reduce the profit based on other contractor income during the year or perhaps make a loss which can be carried back.

            It will mean you'll most likely be on BR tax code at your permie role, but you'll end up better off in the long run due to effectively getting the NI free pay from two jobs.

            Comment


              #7
              Hi Sally,

              Thanks for the detailed explanation.

              At what point in the process to close the company are any retained profits distributed as capital gains (assuming ESC16 has been used) - I assume at the very end, when the company is dissolved, or must the company account be closed before then?

              Kess

              Comment


                #8
                Originally posted by Maslins View Post
                It does however also make a difference to the amount of NI you'll pay.

                There's arguments either way, but I think (unless you're convinced you'll never use the company again) you're best off keeping the company, and remaining an employee at the NI upper earnings threshhold. This will either reduce the profit based on other contractor income during the year or perhaps make a loss which can be carried back.

                It will mean you'll most likely be on BR tax code at your permie role, but you'll end up better off in the long run due to effectively getting the NI free pay from two jobs.
                True. NI is complicated with multiple concurrent jobs. I don't know if you can still do this but I found myself in exactly that position some years ago. The affect of this was that I paid considerably more that the "maximum" employee contribution. After some correspondence my NI was recalculated and the difference returned.

                Comment


                  #9
                  Closing a company

                  Hi Sally BFCA

                  Thanks for your advice, it was very helpful, for now my status is "not trading". One question, as long as there is no activity with my company, I should not incur any charges?

                  Comment

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