Closing the company - Steps required please

[decentguy]

Hi

I am in process of closing my company as I have found a new permie role.
What are the steps required in order to ensure that I pay least tax of course

So far I have paid last year's corporation tax
Paid all VAT

My contracting company does not have any income anymore as my contract is finished. So final bank statements are also done.

Please let me know what scheme to use in order to pay least tax

[MichaelSJD]

There are various ways to extract your monies but an application to apply Extra Statutory Concession C16 can be an efficient way to draw a final distribution by way of capital, rather than income and by way of dividends.

Various rules do however exist as to conditions that need to be met in order for you to do so. You will also need to account for earnings in the tax year of closure (including earnings from previous and future employments). Therefore it is best to always take advice from your accountant to make sure the option chosen is appropriate for you and your own circumstances.

[xoggoth]

THis was covered not long ago. What I said was:

1) Ensure any payments/loans etc settled including any money owed to/by HMRC.
2) Write to Employer Processing Office, Newcastle to be removed from PAYE etc.
3) Dereg from VAT, this is probably most complicated bit. Form VAT 7.
4) Write seperately to tax office that deals with your CT and enclose necessary declarations re ESC C16, you will find suitable templates on net. They should write back within week or two giving permission to distribute any assets under that scheme.
5) Revalue any assets realistically if necessary and distribute.
6) Close bank accounts, usually just a letter and enclose any cards/cheques suitably cut up.
7)Send form DS01 to Co Hse - they will acknowledge but it takes 3 months+ while they advertise in London Gazette in case of objectors.

If you want to see what lesser mortals said, it's here:

http://forums.contractoruk.com/accou...t-do-i-do.html

[xoggoth]

Bunch of links from my notes can't be @rsed to sort them out

Login to AccountingWEB | AccountingWEB (1 of 4)23/06/2006 17:30:25
http://www.poweraccountax.co.uk/data...%20company.pdf
CTM36130 - Particular topics: company winding up etc.: distributions
PLC - Distributions: a quick guide
Informal winding up of companies
http://www.cipfanetworks.net/fileupl...8620085593.pdf

http://forums.contractoruk.com/accou...n-company.html
http://businessdatabase.indicator.co...TXMD_EU110708B

Accounts disclosure for final accounts prior to voluntary winding up | AccountingWEB

Guidance - strike off, dissolution and restoration (GP4)

Accounts disclosure for final accounts prior to voluntary winding up | AccountingWEB

How To Close Down Your Limited Company | Link4Business

http://forums.contractoruk.com/accou...cient-way.html
HM Revenue & Customs: Selling or closing your company and Corporation Tax
HM Revenue & Customs: Capital Gains Tax on business assets: the basics

Working out Capital Gains Tax | Business Link

BEST HMRC
CTM36220 - Particular topics: company dissolution: distributions treated as being made on formal winding up
BEST Co Hse
FAQs - Striking-Off, Dissolution and Restoration

CTM36220 - Particular topics: company dissolution: distributions treated as being made on formal winding up

[Waldorf]

Take a look at this:

http://www.nixonwilliams.com/images/...%20Company.pdf

My accountant recently sent a newsletter and mentioned that the ESC C16 is about to disappear, i seem to recall that the limit will be reduced to £4K or something similar.

[northernladuk]

<stuff>

Nice effort!!

[decentguy]

Take a look at this:

http://www.nixonwilliams.com/images/...%20Company.pdf

My accountant recently sent a newsletter and mentioned that the ESC C16 is about to disappear, i seem to recall that the limit will be reduced to £4K or something similar.

Many thanks. Precisely what I was looking for. Will review it and also ensure that my accountant (a very small firm) is aware of all points mentioned

[decentguy]

Basically I gave up my 50% shareholdership to my wife who is now 100% shareholder.

She is currently unemployed so any proceedings from closing the company will go to her and she can take majority of benefit from tax perspective.

I did not wanted that burden as I am already paying lot of tax as a permanent employee.

[ASB]

Basically I gave up my 50% shareholdership to my wife who is now 100% shareholder.

She is currently unemployed so any proceedings from closing the company will go to her and she can take majority of benefit from tax perspective.

I did not wanted that burden as I am already paying lot of tax as a permanent employee.

1) Pay salary to cover her 0 rate band (depending on whether you think it is justified or not)
2) Pay dividend to use all her basic rate allowance

Repeat 1 and 2 until out of funds. How effective this is will depend upon how much is retained, what your attitude is toward continuing filing accounts, don't forget the impact of 1 and 2 on any WFTC and all of that sort of stuff too.

The ESC is fine, but it can mean potentially CGT.

You could do part of 1, 2 and then get the balance out as capital. This puts less in the amount that is relevant in the case of CGT.

[decentguy]

1) Pay salary to cover her 0 rate band - DONE (depending on whether you think it is justified or not)
2) Pay dividend to use all her basic rate allowance

Repeat 1 and 2 until out of funds. How effective this is will depend upon how much is retained, what your attitude is toward continuing filing accounts, don't forget the impact of 1 and 2 on any WFTC and all of that sort of stuff too.

The ESC is fine, but it can mean potentially CGT.

You could do part of 1, 2 and then get the balance out as capital. This puts less in the amount that is relevant in the case of CGT.

Salary payment done - paid 7000....so no extra tax for wifey
Dividend payment for this year..being done - about 34k
For rest of the fund in company we are either going through ESC16 or just CGT. Not decided yet.. Still researching what is best option