Winding up my limited company

[frankdb]

Hello. My working practices have changed which means it now makes more sense for me to work via an Umbrella company.

This means I want to wind up the Ltd company I have had for the past 8-9 years and I will ask my accountant to do this. I am the sole shareholder.

I think that I (or my accountant) will have to apply to HMRC for permission to take any funds from the company as capital. However, there are quite a lot of retained profits in the company (~200k) and I have heard vague mention of this causing issues.

Does anyone have any experience of this application to HMRC? What is involved? And why might I not get the answer I would like?

Also is it possible to claim taper (or any other) reliefs assuming I can take the money out of the company as capital?

And if I can't take it as capital, what happens then?

Thanks in advance.

[Little'Old Me]

Hello. My working practices have changed which means it now makes more sense for me to work via an Umbrella company.

This means I want to wind up the Ltd company I have had for the past 8-9 years and I will ask my accountant to do this. I am the sole shareholder.

I think that I (or my accountant) will have to apply to HMRC for permission to take any funds from the company as capital. However, there are quite a lot of retained profits in the company (~200k) and I have heard vague mention of this causing issues.

Does anyone have any experience of this application to HMRC? What is involved? And why might I not get the answer I would like?

Also is it possible to claim taper (or any other) reliefs assuming I can take the money out of the company as capital?

And if I can't take it as capital, what happens then?

Thanks in advance.

There are quite a few "issues" here - and most should be answered by your accountant. But in his defence, the HMRC are being more difficult about taking out the funds as capital instead of dividends as it will mean they get less tax. For this reason, your accountant will write to them first and clarify with them that you can do it. If the HMRC refuses, they will give their grounds and that will give your Accountants the opportunity to put a case forward to them.

[ASB]

You can do it yourself (I did) but it is easy to get it wrong. It has been covered in some detail previously so a search may prove beneficial.

It's also very important to do everything in the right order, otherwise you can end up in the somewhat unfortunate position where the crown get their hands on the retained funds and it becomes a nightmare to unravel.

A number of the rules on relief have changed recently and as mentioned HMRC are sometime reluctant to grant the required concessions. If you are unable to persuade them - and the sums involved warrant it - then you can do a formal (and somewhat more expensive) liquidation which should ensure the final distributions are treated as captial and it then effectively becomes a sale of the shares under the CGT regimes which can yield a significant saving against extracting the funds as dividends.

[xoggoth]

200k! Blimey. I will wind up mine this year, looking forward to that 300 quid.

[Dandyman]

Are there potential issues here due solely to the amount of funds in the account, or does anyone who has to potentially wind up their company have the same issues? For example if the bulk of the profits have already been paid out in dividends, and there is a minimal amount left in the account (say under £10k), could the same problems arise?

[ASB]

Are there potential issues here due solely to the amount of funds in the account, or does anyone who has to potentially wind up their company have the same issues? For example if the bulk of the profits have already been paid out in dividends, and there is a minimal amount left in the account (say under £10k), could the same problems arise?

There is at least a theoretical possibility of HMRC viewing the entity as an investment company rather than a trading entity and then there are different rules.

[sage@reillymcmordie]

Hello. My working practices have changed which means it now makes more sense for me to work via an Umbrella company.

This means I want to wind up the Ltd company I have had for the past 8-9 years and I will ask my accountant to do this. I am the sole shareholder.

I think that I (or my accountant) will have to apply to HMRC for permission to take any funds from the company as capital. However, there are quite a lot of retained profits in the company (~200k) and I have heard vague mention of this causing issues.

Does anyone have any experience of this application to HMRC? What is involved? And why might I not get the answer I would like?

Also is it possible to claim taper (or any other) reliefs assuming I can take the money out of the company as capital?


And if I can't take it as capital, what happens then?

Thanks in advance.

You have two choices. Either you elect for a formal winding up with a licenced liquidator or you can apply to have the company struck off.
If the latter you must sign a statement of assurance to HMRC that you will meet all taxes due for both the company and personally. The final distribution is taxed on you using your capital gains personal allowance and any taper relief and indexation allowance (if appropriate).