Closing down company

[ntronic]

Hi,
Wondering if someone may be able to help here.

I have decided to close down my company and have been advised by my accountant to go down the MVL route with appointment of a liquidator etc. with corresponding costs.

I understand that there is a simpler option of doing this via ESC C16 but I also understand that this is currently under consulation. Can anyone advise if a decision has been made in this regard and this is no longer an option?

My accountant has advised that the new legislation came into effect from 6 April 2011 applying to companies with excess of 4K in cash wishing to use Entreprenuers Relief. But I cant seem to find this documented anywhere and no mention on HMRC site either.

Any advice would be greatly appreciated.

Thanks

[Taxless]

No, it has not gone yet.
I chased HMRC on Friday about an application I had submitted a few weeks ago and was given a verbal confirmation that it will be proceeding under ESC C16.
The confusion on this appears to stem from the Government proposals brought forward last December, when draft legislation was also published. This provoked objections from the Accountancy profession and HMRC agreed to consider the feedback and this led to the proposed legislation being omitted from the Finance Bill.
It therefore appears that HMRC are still looking at this and from what I have read, the Government intends to publish its response when they have completed their review.
One potential problem is that primary legislation would not be required to move ESC C16 onto a statutory basis as there is an enabling power at Section 160 of FA 2008 permitting the move to formal legislation by Treasury Order. If this route is used then Parliament has to have the chance to debate it.
HMRC have confirmed that there will be no retrospective implementation of any change, so there is still a window of opportunity and we are certainly fast tracking applications in suitable cases.

[ntronic]

Great, thanks for responding!

Is this something you are doing yourself or through an accountant? If on your own can you please advise on the process involved or point me to where I can get some information on this?

I'm not sure I have full confidence in my accountant any longer for pushing me down the more expensive option and he has gone a bit quiet on me since I questioned it.

Thanks

[Taxless]

I am doing it myself, but as an accountant, following our own in house system.

You effectively write to HMRC saying that the company has ceased trading and has come to the end of its useful life and so you would like to apply to wind it up under ESC C16. (If there is a lot of cash in the company this may be a stumbling block).

The application has to contain some undertakings that you will pay any tax arising etc.

I am just going out but will see if I can find a link later to anything for you.

I have no idea how HMRC view non-represented applications, but I can't see why they would object, provided you supply all the information.

If they reject an application for any reason (unpaid tax etc.) you can rectify the issue and then apply again.

[ntronic]

Thanks would certainly appreciate any links if you can share the same.
I'm hoping there's a template letter somewhere on the web.

[Taxless]

You need to prepare final accounts, corporation tax computations and return and the following link takes you to the section in the HMRC internal manuals that deal with this :

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

This seems to cover what we would normally cover in an application, confirming company’s
cessation of trading, intention to collect debts etc. distribute balance to shareholders, not transfer/sell
assets to another company with similar or identical shareholders, not part of a scheme of
reconstruction etc., supply info. On CT liability and pay it, pay any CGT on distribution.

You also need to arrange for the company to be struck off at Companies house, see following link :

FAQs - Striking-Off, Dissolution and Restoration

Other matters to consider would be cancelling VAT registration and PAYE scheme and avoiding any unnecessary VAT charges on cessation, make sure you make the relevant CGT and employment page entries on your next personal tax return.

[ntronic]

Thanks for the tips.
I suspect I would still need my accountant for the final accounts and corporation tax but can do the ESC C16 bits myself.

I also managed to find a template letter here:
http://businessdatabase.indicator.co...TXMD_EU110708B

Do you think that's fit for purpose?

Thanks

[monobrow]

useful, will save for later. thanks

[Tanya@SC Lee Accountant Ltd]

Obviously you need DS01 as well

useful, will save for later. thanks

[Taxless]

Obviously you need DS01 as well

Perhaps if you took a little more time to fully consider the earlier posts you would see that one of the links takes you to the Companies House website where the DS01 issue is covered.

I don’t expect the original poster to be a tax expert, but I do expect him/her to be able to read.