Closing my company down - what is left with HMRC to do?

**BolshieBastard** · 2 February 2015, 11:46

Pay any outstanding company bills then draw all remaining money out.

Pay all other incidental expenses out of your own pocket.

Notify bank to close company account.

Complete last VAT return

Your accountant should really be handling the administrative side of closing the company.

Ive followed this procedure 4 times already and hmrc havent objected once.

**Maslins** · 2 February 2015, 12:00

- cease trading,
- de-register for VAT/PAYE (where applicable),
- submit final tax returns (VAT/CT/PAYE),
- settle any liabilities from the above,
- review balance sheet, any other non cash assets or liabilities? Try to get rid.
- what's left, is it >£25k? If not, strike off should suffice. If so, look at an MVL,
- if striking off, remember to clear out the bank balance before the strike off completes,
- declare final distributions on CGT section of relevant personal tax return(s).

**Forbes Young** · 2 February 2015, 12:38

Originally posted by kesm View Post

Hi all,

I am going to close my company down, get the ££ out and invest it.
I am trying to get my accountant to let me know what they need to do, so they can close my company down, but I get vague answers - I guess because they want to keep my monthly charge rolling!
Can the accountants out there let me know what I have left to do wrt HMRC?

Items that come in mind are:
1) VAT return
2) end of year accounts
3) 10% for closing down the company

anything else??

Many thanks all

Most of your question has been answered above but with regards to the 10% tax target you will need to keep below the £25k threshold to claim Entrepreneurs Relief - otherwise seek an MVL.

The following options could be for a company with £50k P&L reserve at strike off:

1. Without MVL, take as divi: £50k @ 25% tax (Higher Rate Tax Payer) = £12,500 tax to pay. Plus accountants charge say £200 + vat to close down the company. Therefore retain £37,300.
2. With MVL, £50k less £11k AEA = £39K @ 10% = £3,900 tax plus £2,250 + vat fees for MVL and closure fees = £6,150 net. Therefore retain £43,850.

Graeme Bennett ACMA MBA

**BQF** · 2 February 2015, 14:10

Whats an 'MVL'? At what point does it make sense to close a company down, and at which point in the tax year? Are there are obstacles to setting up another company immediately afterwards?

**northernladuk** · 2 February 2015, 14:14

Originally posted by BQF View Post

Whats an 'MVL'? At what point does it make sense to close a company down, and at which point in the tax year? Are there are obstacles to setting up another company immediately afterwards?

MVL is Members Voluntary Liquidation. Loads of stuff on it on here..
https://www.google.co.uk/search?q=MV...CMWC7QaykoCAAg

It makes sense to shut your company down when you've done trading or at any other situation there is a business need to do so. You cannot shut it down to gain a tax advantage and re-start doing exactly the same thing. You will fall foul of the aggressive tax avoidance and 'pheonixing'.

**BQF** · 2 February 2015, 14:19

Originally posted by northernladuk View Post

You cannot shut it down to gain a tax advantage and re-start doing exactly the same thing. You will fall foul of the aggressive tax avoidance and 'pheonixing'.

Will I? If I create another business with a different SIC code would that qualify as a 'different business'?

I've heard of a few contractors getting a big sum in their account and then just squashing the company, and re-opening a new one...

Are there specific regs against 'Phoenixing'??

**northernladuk** · 2 February 2015, 14:26

I've heard of people fudging their books and not paying any tax. Doesn't make it right. Try google and the search method I used above.

**Maslins** · 2 February 2015, 15:38

@BQF Google "transactions in securities" perhaps adding "liquidation" and you should find the anti avoidance legislation. It's basically there for cases where the underlying trade continues, just shifted from one Ltd Co to another.

As with so many things in this world it's very grey and open to interpretation. Some will suggest taking a couple of months off in between contracts is enough to consider the trade ceased and brand new one started. Others will suggest even a couple of years and doing largely different work before/after close you could still be caught. No useful case law as yet.

**TheCyclingProgrammer** · 2 February 2015, 15:39

Originally posted by BQF View Post

Whats an 'MVL'? At what point does it make sense to close a company down, and at which point in the tax year? Are there are obstacles to setting up another company immediately afterwards?

Depends what the new company is for. Theres no obstacle per se but if you intend to continue doing the same thing under a new company you are essentially continuing to trade and your eligibility for entrepreneurs relief will be affected. You need to intend to stop trading for ER to apply to any capital distribution.

As Maslins says, if you did claim ER but continued to trade, HMRC could seek to apply the anti avoidance provisions in the TIS rules and you'd end up paying tax as if you'd taken a dividend instead. Plus penalties and interest.

Closing my company down - what is left with HMRC to do?