Administrated Dissolution - A good way to close limited company?

[jamesbrown]

Hi,

Isn't the entire purpose of a Limited company that the financial liability is limited to the comany structure and doesnt endanger the owners personally?

Only when they've acted properly. A director has a whole host of legal responsibilities. If they fail in any of those responsibilities, they can become personally liable.

[ascender]

That's crazy advice, but the situation the OP finds himself in I suspect might become quite commonplace over the next while. I know a few benched colleagues who didn't make the move to umbrella when offered and now due to some of the big companies blanket-banning PSCs and the impact of COVID, are burning through their warchest and money left in the company which is set aside for their upcoming tax bills.

[jamesbrown]

That's crazy advice, but the situation the OP finds himself in I suspect might become quite commonplace over the next while. I know a few benched colleagues who didn't make the move to umbrella when offered and now due to some of the big companies blanket-banning PSCs and the impact of COVID, are burning through their warchest and money left in the company which is set aside for their upcoming tax bills.

Sadly, there will always be a sufficiently large number of clueless and gullible contractors to justify the efforts of dodgy individuals and schemes. All we can do is to point people in the right direction. At least some of the noobs are asking for advice and hopefully taking it, and I definitely wouldn't put them in the clueless/gullible category.

[Lance]

Sadly, there will always be a sufficiently large number of clueless and gullible contractors to justify the efforts of dodgy individuals and schemes. All we can do is to point people in the right direction. At least some of the noobs are asking for advice and hopefully taking it, and I definitely wouldn't put them in the clueless/gullible category.

Indeed.

The first step in solving a problem is to accept there is a problem.

[Ian Richardson GT IoM]

Administrated Dissolution

Option 2 suggested by 'Future Strategy': perform an 'Administrated Dissolution', do not pay the Corportation Tax tax that the limited company owes, and save myself several thousand.

It suffices to say that Option 2 is tempting! Here is how it was explained to me:

- The company is closed
- The Limited company PAYS NO CORPORATION TAX (the cash that Isaved in my business acct is paid out in dividends instead)
- The company's creditors (HMRC) are notified that the debt due will not be paid.
- They will dispute this, and there will be nothing that they can do.
- There are zero reprecussions in terms of other limited companies, personal credit history, etc. UNLESS open essentially the same limited company to continue contracting (this would be a 'phoenix' company rising from its own ashes that would be illegal). So this is a one-time thing for those coming off of IR35.
- I am not sure if me continuing to work for the same employer under Umbrella PAYE or as a Permanant employee will count as a 'Pheonix company activity'? Will an Administrated Dissolution prevent me from working in the sasme industry?
- The guy says this is entirely legal, and that the changes of a retrospecive ruling forcing me to pay up in the future (similar to Loan Charge I saw in the news) is remote.

It is possible that the OP may have misunderstood the advice received here, so I've posted it on LinkedIn (linked to Future Strategy & the FCA)