Issuing dividends during period company dissolved which will be restored

[Lex]

Hi all,

I have been running a Ltd company for a few years but due to ill health was unable to file accounts with Companies House or Corp Tax Returns with HMRC for several years during which I was forced to stop contracting. The company was struck off / dissolved as company accounts were not submitted on time and company bank accounts frozen with all money transferred to the Treasury Solicitor.

I am now recovering slowly from my health issues and am trying to restore the company, obtain my funds back from the Treasury and file all the relevant Accounts / Tax Returns (Companies House and Corporate Tax).

My question is during the period the company was dissolved which was for more than 1 year (due to ill health and not being able to work) once the company is restored to the company register can I declare a dividend during the period the company was dissolved? According to companies house once a company is restored back to the register via Administrative Restoration it is as though the company had never been dissolved.

A quote taken from Companies House website:

"Under certain conditions, where a company was dissolved because it appeared to be no longer carrying on business or in operation, a former director or member may apply to the registrar to have the company restored to the register, this is called ‘administrative restoration’. If the registrar restores the company it is deemed to have continued in existence as if it had not been dissolved and struck off the register. Section 1025 of the Companies Act 2006 gives details of the requirements relating to administrative restoration."

I would therefore assume that I should be able to declare a dividend for this period as if it was not for my ill health I would have declared a dividend and paid myself accordingly but could not as the bank account was frozen with all money residing with the Treasury.

Can the expert accountants on here please advise? One accountant I have spoken to states I would not be able to declare the dividend although this seems at odds with Companies House statement of company appearing to never have been dissolved?

Following my ill health this is proving extremely stressful to try and retrieve my company money and try to continue where I left off. Any guidance will be appreciated.

Many thanks.

[northernladuk]

So the key is the company will continue as if it wasn't dissolved. I don't think that means it froze in time and continues where it left off. I would imagine you owe the liabilities from the period that closed while it was struck off and then continue in the current period as normal. You would surmise from that you can only draw dividends in the current period.

You mention an accountant also says the same. The period clock still ticks. It doesn't stop just because your account it closed. I think you are not understanding what they mean when they say 'continue as if it had never been dissolved' i.e. periods come and go and then closed, new periods open and so on. Be interesting to see what they do about late submissions of previous periods actually.

Why the eagerness to declare a divi for the closed periods anyway? You have enough profit to max out this period so hoping to add some on for the closed one as well?

[northernladuk]

Be interesting to know if you can put the expenses to get the company restored through the company as technically there was no company in existence when you spent the money to restore the company to put the expense through the company books innit....

[Lex]

Thanks for reply. Yes keen to try and declare the dividend to use my lower rate tax credit for the period. The case is unusual as I am now doing all these late tax returns for previous years covering previous income but the process of simply administrating what I would have done at the time if I was fit and well may not be possible.

Anyone had to deal with a similar situation before?

Thanks.

[northernladuk]

Surely you would have to back date the dividend declaration to that period for it to count which would be very naughty? I am sure HMRC would question you ability to hold a meeting to declare a dividend but not file your accounts.

[Lex]

Yes that is true. I am not trying to do anything wrong, hence trying to get a view from experts.

Having said that the nature of my illness meant that prior to company dissolving I was still working and trying to continue life as normal but I still wasn't able to keep on top of a lot of other things including all of my financial obligations. Work was almost an escape from my other issues or more pretending I was ok when I was not.

I want to play everything by the book but I guess I am feeling that I lose out for my hard work when I couldn't deal with everything that was going on at the time Oh well, life is not fair as they say.

[northernladuk]

Yes that is true. I am not trying to do anything wrong, hence trying to get a view from experts.

Having said that the nature of my illness meant that prior to company dissolving I was still working and trying to continue life as normal but I still wasn't able to keep on top of a lot of other things including all of my financial obligations. Work was almost an escape from my other issues or more pretending I was ok when I was not.

I want to play everything by the book but I guess I am feeling that I lose out for my hard work when I couldn't deal with everything that was going on at the time Oh well, life is not fair as they say.

I would drop Clare @ Intouch or Craig from Nixon Williams who post regularly on here a PM. They are normally all over the forums but have been pretty quiet the last few days. They may know some tips n tricks. They maybe able to offer advice on pay for example, or can you even do that while the company is closed? Anyway, they may know something clever.

[Craig at Nixon Williams]

I'm assuming that no meeting was held to declare the dividend during the time that the company was dissolved - therefore you couldn't do this unfortunately.

As NLUK has said, backdating dividends is naughty and in any case you won't have paid the funds out to yourself during the period that the company was dissolved and so it won't be taxable in the period.

My advise would be to move on and get it right going forward. I assume that you have an accountant in place to help you keep on top of this stuff in the future..

Hope this answers your question.
Craig

[DirtyDog]

I would drop Clare @ Intouch or Craig from Nixon Williams who post regularly on here a PM. They are normally all over the forums but have been pretty quiet the last few days. They may know some tips n tricks. They maybe able to offer advice on pay for example, or can you even do that while the company is closed? Anyway, they may know something clever.

Clare is away at the moment - Craig@InTouch is covering for her, though.

[northernladuk]

Clare is away at the moment - Craig@InTouch is covering for her, though.

He is? Oi Craig, coffee, white, one sugar, my desk now!!!