Advice on winding down contracting activities

[ike2112]

I have just finished what looks like my final contract and am planning on taking a perm role in mid-Aug. I’ve been contracting a couple years; year 2 just ended in June, but my final contract ran to mid-July so barely 3 weeks into company year 3.
I am not sure what to do with my company, and to compound matters I am not sure what to do about my accountant!

I am sick of my accountant. They seem to be relatively expensive for a distance contractor accountancy firm. I am often too busy during the day to call them, so I email them a couple of questions... and that quickly descends into 8 or 9 different people emailing me part-responses over the space of a week. They were also not particularly helpful at all in my first year, when I missed out on a tax-efficient way of taking more money out of the company because they didn’t advise me to (I only took ~ £34k from the company a couple of tax years ago).

So the best people to instruct me about closing the company or making it dormant, are people that frankly have lost my faith.

Question 1 - Can anyone recommend an accountancy company that they have used through a period of the company being dormant, or closed? And have helped and led them through what the best course of action is? And what their costs are?

Question 2 - My company has £30k+ still in it. I’m looking to extract as much money out of it as I can without being seriously stung for a high rate of tax (I’m already at the point where I think that I will need to pay 25% on a small amount of the dividends taken in this tax year). Is it better to make it dormant or close it down? If I close it how can I get all of that cash out from it?

Question 3 – I had a look on Companies House website, and it described a dormant company as one which has no ‘significant accounting transactions’ in the period. Yet mine will have these; the third year of the company started 1 July but my final invoice will reach the account tomorrow and I still want to take income out of it within the year. Does that mean it needs to stay active until 2014?

Question 4 – As my last contract finished mid-July, I will need to have accounts done for 2013-14 company year. My current accountant though is being paid up to end of July which covers the only trading period. Should they just complete my year-end accounts for June 2014 now as part of their duties?

Question 5 – As I leave the accountant 1 month into a new company year, with trading/income ceased, and halfway through a tax year with a self-assessment needed for myself and my wife (I guess; she is a 20% shareholder but not director) – what should I be expecting them to have completed for me? I don’t want to end up paying for certain services twice.

Perhaps a great answer to Q1 might solve the rest, but I'd like to learn from others experiences.

Thanks in advance

[northernladuk]

I am often too busy during the day to call them

Make time. Problem solved.

Can't blame the accountant when you won't take reasonable steps. If they are bad at communication then change tact. Communication aside they haven't cocked up in anyway have they? If not then they are still the best place to go for first advice. Challenge it if you wish but first job is to ask them not us.

[Maslins]

I'd suggest it's not worth changing accountant at this late stage in your company's life.

I wouldn't worry about the fact your trading went on a few weeks after your year end. Assuming you want to close the company down, I'd recommend extending your year end by a month, so you have a 13 month final period that then encapsulates everything.

Re the £30k left...given how little above the £25k threshold for CGT from a strike off it is, if I were you I'd be inclined to perhaps consider sticking £5k into a pension for you to bring the net assets just below £25k. Alternatively if you don't want to do this you could go through a formal liquidation to get CGT treatment on the final funds.

[ike2112]

Northernladuk; why the rude and unhelpful reply?

I have of course over the space of 2 years called them. Their service over the telephone is not great either - actually speaking to my own personal accountant is virtually impossible. Instead I must repeat myself to whichever member of the team answers the phone and they may, or in most cases do not, respond to all of my queries.

They have given me poor advice in year 1. They did not advise me correctly on how to take income in a tax-efficient way from the company, letting me pass up on just under £10,000 worth of scope in the lower (20%) tax bracket and instead have that 'stuck' in the company. They told me not to bother VAT registering - it was only through speaking to a fellow contractor I went back to them and questioned this. They told me to make my wife a director, which I did, then another member of their staff later admitted there seemed no point in having done so.

They have so far made 2 errors in quarterly management accounts (out of 8 supplied) that I have had to ask them to correct.
The final straw was when I asked 3 questions in a single email a few weeks ago. Very straightforward questions actually. I received 4 email replies from different people each skirting around the subject but none actually answering the question. I called them, and had to repeat the entire email and replies to the person I spoke with. I then received another spate of emails from another list of separate individuals. Over the space of 4 days I had to deal with 9 people, and still did not have the questions answered. Only when I eventually declared that I was sick of the service and wanted to leave, all of a sudden the main accountant became available and answered my questions.

Can you not just trust what I have said and accept there are valid reasons for my accountant having completely lost my faith? I wish to find a new accountant, and I wish for them to assist me through whatever my next steps may be.

So believe me, calling them does not solve the problem.

[TheFaQQer]

Can't blame the accountant when you won't take reasonable steps. If they are bad at communication then change tact.

tack

HTH

[TheFaQQer]

Question 4 – As my last contract finished mid-July, I will need to have accounts done for 2013-14 company year. My current accountant though is being paid up to end of July which covers the only trading period. Should they just complete my year-end accounts for June 2014 now as part of their duties?

They should be expected to complete the work that they are paid to do, in accordance with the contract. Anything more is a bonus, anything less is an issue.

Question 5 – As I leave the accountant 1 month into a new company year, with trading/income ceased, and halfway through a tax year with a self-assessment needed for myself and my wife (I guess; she is a 20% shareholder but not director) – what should I be expecting them to have completed for me? I don’t want to end up paying for certain services twice.

They should be expected to complete the work that they are paid to do, in accordance with the contract. Anything more is a bonus, anything less is an issue.

[ike2112]

I'd suggest it's not worth changing accountant at this late stage in your company's life.

I wouldn't worry about the fact your trading went on a few weeks after your year end. Assuming you want to close the company down, I'd recommend extending your year end by a month, so you have a 13 month final period that then encapsulates everything.

Re the £30k left...given how little above the £25k threshold for CGT from a strike off it is, if I were you I'd be inclined to perhaps consider sticking £5k into a pension for you to bring the net assets just below £25k. Alternatively if you don't want to do this you could go through a formal liquidation to get CGT treatment on the final funds.

But the problem is I really do not trust them.

I emailed them 2 months ago asking about potential next steps for the company if I stopped contracting. All they have said was it will cost £60 plus VAT to keep the company ticking over as dormant. They will continue to provide all forms and submissions.

That was it. That was their total extent of advice or options. I've done a little research myself and I can see there are far more options than that, but I just do not have the knowledge or understanding to determine which option is best for me.

When I mentioned the company balance, that does not include the Corp Tax and VAT I have stored away that I will need to pay out at some point. Does that matter?
Is it the case then I could get the balance down to, say £24,800 via pension contributions for my wife and I and then have the company struck off? Liquidation seems a lot more hassle and about a grand or two more expensive?

[ike2112]

They should be expected to complete the work that they are paid to do, in accordance with the contract. Anything more is a bonus, anything less is an issue.

The contract is fairly vague on this. The most relevant line states more or less as you have; in the event of termination of services, all paid-for services will be provided up to the date of termination within 28 days.

So it doesn't make it crystal clear what they will provide. You could argue that unless you pay for a full year, they aren't bound to provide me with anything, because other than quarterly management accounts everything else is done at year-end.
But if the only trading in 2013-14 was in the month they are my accountant, then there is no accounting work in 2013-14 for a new accountant to do. So should they not just complete the year-end account now?

[TheFaQQer]

I emailed them 2 months ago asking about potential next steps for the company if I stopped contracting. All they have said was it will cost £60 plus VAT to keep the company ticking over as dormant. They will continue to provide all forms and submissions.

That was it. That was their total extent of advice or options. I've done a little research myself and I can see there are far more options than that, but I just do not have the knowledge or understanding to determine which option is best for me.

Did you ask for options, or did you say something like "I'm thinking of making the company dormant - what would I need to do?" which sounds like how they interpreted it.

To make a company dormant, you just stop trading. It's probably worth de-registering for VAT and PAYE but you don't have to do that, so they are correct in their answer. You still need to file certain documents, which is where their charge comes from.

Have you asked for other options? If I got a response that just told me about their fees for a dormant company, then my response would then be to ask about shutting it down completely and what happens to the money.

When I mentioned the company balance, that does not include the Corp Tax and VAT I have stored away that I will need to pay out at some point. Does that matter?

You need to pay your bills before you can shut down a company. You can't just walk off with the VAT and tax money.

[northernladuk]

It's not rude and unhelpful. You don't call your accountant but have problems with email. It is a common and rather annoying theme in problems that posters put up about agents/accountants etc... If you are having a problem... call them. Period. Don't rely on mail, text etc. That is a poor way to have a professional relationship. Nothing rude or unhelpful about that advice and I stand by it. You are legally responsible for your company's finances. It is your responsibility to make sure it is correct and if picking the phone up makes the difference between you fulfilling this obligation and not then it's an easy answer. There is also the personal hassle it removes.

But.. all that said you have clarified the situation. In that case, if you can't trust your accountant get another one. Maslins says not but if they are this bad you have an obligation to do so. Try calling one of the helpful ones on here. Maslins, Clare (Intouch), Jessica (Whitefield who we haven't seen for a bit) etc who seem very personal and see if they will offer you a package just to get over this final stage if your relationship with your existing provider is so irreparable.