How long does it take to close down/liquidate company?

[Fandango]

I need to close down my presesnt Ltd company when this present contract comes to an end (next month or so). Reason being i've got about £75k in the account after CT & vat liablilties for this year are paid and we're in the process of selling our house, so i really need the money to go towards the next property to reduce our new mortgage amount and secure a better rate deal.

I'm looking to have some time off as well before looking for a new contract. So there would be a bit of a gap between closure of first company and creation of next.

I'm aware of the demise of ESC16 and now its a case of instructing insolvency practioners, but i just wondered what sort of time scales are involved in actually shutting down and getting the money out?

Cheers

[Clare@InTouch]

From my understanding of the liquidation process it would depend on how quickly you can get debts cleared and HMRC to confirm that all taxes are clear & schemes closed, and how quickly you can get closure accounts prepared. It's then passed to a liquidator who will take control of the bank account, advertise the liquidation, and then make final distributions of capital. You should be looking at months, probably around 3 or more, rather than weeks.

[Fandango]

Oh right i didn't realise it would be that long!

So does that mean realistically you'd need to not be in work for at least 3 months as well? As can you open another company if the other one is still in the process of being shut down?

[Clare@InTouch]

Oh right i didn't realise it would be that long!

So does that mean realistically you'd need to not be in work for at least 3 months as well? As can you open another company if the other one is still in the process of being shut down?

Not necessarily. If you want to be cautious then use a brolly short term until the old company is struck off, then start a new one.

The old ESC C16 used to restrict you in regard to starting a phoenix company as you had to be closing for genuine commercial reasons, not tax reasons, but the same statutory declarations aren't necessary if you're going through formal liquidation. Talk to the liquidator though, just to be sure there's no reason why you shouldn't do so as it's not something I've come across yet. With the amount of new small liquidations that are going to be happening it's possible HMRC could object. If you do something for purely tax reasons then there's often an anti-avoidance provision that they can invoke.

[Greg@CapitalCity]

Oh right i didn't realise it would be that long!

We recently had our first client go through the MVL process. Once the final trading accounts had been prepared and filed with the HMRC, and the Corporation Tax paid, the client received his retained funds from the liquidators after 4 weeks - and they were in no particular hurry. I expect if you wanted to get it done quickly, about two weeks would do it. Note the actual striking off of the company etc will take several more months, but most clients are just concerned about how soon they can get their hands on the company funds.

PM me if you want the details of the liquidator. They were good value, and very efficient.

[Fandango]

Cheers Greg

I'll send a PM now

[northernladuk]

And as this is clearly tax avoidance what are the risks and potential fallout from this?

[Mister Clark]

And as this is clearly tax avoidance what are the risks and potential fallout from this?

What's wrong with tax avoidance?

[northernladuk]

Aggressive tax avoidance in the current climate? You would be a fool to not understand and weigh up the risks right now. Not saying don't do it but it isn't the time to be flippant about using a system to avoid tax that wasn't designed to do so.

[Mister Clark]

Aggressive tax avoidance in the current climate? You would be a fool to not understand and weigh up the risks right now. Not saying don't do it but it isn't the time to be flippant about using a system to avoid tax that wasn't designed to do so.

Everyone has their own perception and appetite to perceived risk. However, using a perfectly transparent established mechanism to reduce tax liability is perfectly acceptable regardless of the current climate IMHO. I think its a spurious argument to suggest otherwise.

Could the government retrospectively argue that you were taking the proverbial? I guess they could but the same could be said for paying divis instead of salary, flat rate VAT, company pension contributions and so on.