Close Down Company

**northernladuk** · 16 October 2017, 21:50

Dunno about the numbers but isn't it an option to wait until the next tax year and take some dividends? Depending on what you plan on doing going forward of course.

**mudskipper** · 17 October 2017, 02:36

Don't forget the corp tax refund on the pension contribution - that will result in another 3K.

Edit: There's some discussion here about whether pension contributions resulting in a loss can be made in a non-trading year. Not sure if this is applicable, but it may be worth seeking professional advice.

**Invisiblehand** · 17 October 2017, 09:54

MVL Online who post on here under Maslins are spoken highly of. I haven't used them myself but as the owner frequently gives excellent advice on here (for free) I'd say a ten minute phone call would potentially be time well spent.

**TheFaQQer** · 17 October 2017, 10:01

Originally posted by 7of9 View Post

I calculated the amount of dividends within the basic rate threshold 17/18. Considering 7.5% dividend tax is better than 10% ER tax, I should withdraw dividends within BR regardless if I choose MVL or not. Then if I put 15K in my pension pot, my reserve will be reduced to 25K. In this case, the company can be striked off.

If you aren't a higher rate taxpayer then you'd be better off taking dividends at 7.5% than the 10% ER. Either way, you're definitely better off taking £5k before next April since that's going to be at 0% (assuming no other dividends this year from any sources) and would reduce the company assets.

**Maslins** · 17 October 2017, 10:20

A few things to add to the mix (which you may have already considered, but not stated in the OP):

- what have you been doing work-wise since the company ceased? If you're in a permie role on a decent salary, then it's likely most/all of your basic rate band is already used up by that. Therefore whilst you may have scope to take a small divi and benefit from the dividend allowance, it might not be 7.5% vs 10%, but 32.5% vs 10%. One nice thing about capital gains is they're entirely independent of income, so even if you earn £millions as income, it'd still just be 10% on the CGT assuming you qualify for ER.

- (perhaps a pedantic point, but one to take a bit of care over) strictly speaking, it should be down to the facts whether funds taken are dividends whilst the trade is ongoing, or a distribution as part of closing. Eg ignoring the fact HMRC would likely never know or look, if you had £29k net assets and took a £5k dividend today, then £24k tomorrow claiming that was as part of closure, you'd be on shaky ground. If HMRC were to look, they would likely be able to argue that actually your business ceased some time ago, and the day between the two withdrawals means nothing, therefore closing funds were £29k, above the £25k cap hence all taxable as dividends. In your case you mention the company ceased trading in Dec 2016, so it may be hard to argue that any further money taken out now was a dividend, and not all part and parcel of closing.

- with the pension, whilst there's no issue with you making the contribution, again if you've already told HMRC you ceased trading in Dec 16, then you may find you get no CT relief on the pension contribution. Ie I realise not helpful to you now but possibly useful for other readers, both this one and the dividend point above should really be things that are considered before the business ceases.

- finally you should find there's a few liquidators who will do simple cash only cases for under £2k. With MVL Online, assuming net assets are around the £50k mark from your email, it'd be circa £1.5k-1.6k all in (inc VAT).

**Dan@OrangeGenie** · 17 October 2017, 10:46

You're mad getting advice on this via a forum, tax advice is always based around your future plans.

The boys at Opus Restructuring are great from an MVL point of view. Mention Dan Moss @ Orange Genie and they'll do it for £1.5K.

**7of9** · 18 October 2017, 21:10

Thank you all lovely people for the response! Sorry, I missed some important details. I took the time travelling and doing random things during the time my company is dormant. No salary run as I am planning to start a permanent role at the end of this year. I have used an average salary as estimate when calculating dividends within BR band.

**7of9** · 18 October 2017, 21:11

Week 2 decided on sticking off and working on the pension figure : Account manager confirmed that I would qualify for ER if the company reserve was below 25K and striking off would be OK.

Then I contacted 2 MVL companies. The one referred by my account manager did not give any useful information. She refused to offer any basic information regarding the ER tax and said she was not an accountant and could not help on the tax figure. I guess for my situation, it’s so easy to bring down the reserve to 25K after normal dividend and pension distribution. She was worried once I understood that, I would not go for MVL.

Another MVL specialists I contacted is Chris Maslins. His response to this post is much more insightful than my account manager who did not give any advice apart from suggested MVL and referred me to the MVL company above. Chris also helped me ran some figures and highlighted the things could affect the 25K threshold-CT relief. If I have high reserve in my company, I would definitely go to Chris for proper MVL.

I have come to the decision to bring down my company’s reserve to below 25K by making more pension contribution. Because I don’t need the money now and I did not make enough pension contribution previously.

Regarding the pension distribution, my account manager did not mention a single word of CT relief knowing I only had a small invoice for this company year and 15K pension I suggested to her will definitely put me in a loss position for the current year.

So I have to email her again about the CT relief. I guess at this point, Dan, you should understand why seeking advice on this forum is a good idea!
I have also request my account manager to give some advice on things should be considered/aware of/warned during the striking off process. And timelines! Awaiting for response…

**northernladuk** · 18 October 2017, 22:10

She refused to offer any basic information regarding the ER tax and said she was not an accountant and could not help on the tax figure

What exactly is your account manager to you? At your accountants?
I think I'd have a fit if I was paying good money for accountancy services and someone said that to me.

Or do you mean at your bank or something?

Close Down Company