Interest received from HMRC on CT after company has closed down

[thunderlizard]

If HMRC are happy to pay it to you personally, that sort of implies it becomes personal income, so you should declare it on your personal tax return, I reckon.

[minstrel]

I have underpaid - in theory the company should pay CT on the interest it receives from the taxman. But at the point I actually received it the company had been struck off, thus the entity to pay did not exist (or for that matter the entity to be repaid).

This happens extremely regularly of course. Probably with almost every company that closes.

Thinking about it again...

If the company has been struck off, doesn't everything revert to the Crown? So the interest earned by the 'dead' company might technically belong to Liz.

Perhaps the proper thing to do is to forward the cheque to Buckingham Palace with a nice letter explaining the situation.

[ASB]

My company is still in 'Active - Proposal to Strike off' so it's not officially dead yet.

Also haven't you underpaid there? Surely you need to pay CT and then treat the remainder as a capital gain?

I have underpaid - in theory the company should pay CT on the interest it receives from the taxman. But at the point I actually received it the company had been struck off, thus the entity to pay did not exist (or for that matter the entity to be repaid).

This happens extremely regularly of course. Probably with almost every company that closes.

[minstrel]

Option 3 doesn't work since the company no longer exists

however, I was in exactly the same position. I had applied for ESC16 and took the remaining funds that way. When the cheque turned up - and was reissued in my name I just put that amount down as a capital gain on my SA (as I had done with the rest of the amounts of course).

My company is still in 'Active - Proposal to Strike off' so it's not offically dead yet.

Also haven't you underpaid there? Surely you need to pay CT and then treat the remainder as a capital gain?

[ASB]

Actually, I've thought of the perfect solution.

Option 3 - pay no tax. If HMCR challenges it I will say it was spend on the annual Christmas for me and the company secretary and is therefore a legitimate expense that can be offset against CT.

Any remainder I could give to charity (as long as don't claim Gift Aid).

Option 3 doesn't work since the company no longer exists

however, I was in exactly the same position. I had applied for ESC16 and took the remaining funds that way. When the cheque turned up - and was reissued in my name I just put that amount down as a capital gain on my SA (as I had done with the rest of the amounts of course).

[minstrel]

Actually, I've thought of the perfect solution.

Option 3 - pay no tax. If HMCR challenges it I will say it was spend on the annual Christmas for me and the company secretary and is therefore a legitimate expense that can be offset against CT.

Any remainder I could give to charity (as long as don't claim Gift Aid).

[MrRobin]

Hmm..

Well you could do 1, but accumulate all the CT up at once so you don't have to keep paying and getting refunds etc etc etc until it reaches zero. At 21% CT and 5% interest, you should infact pay 21.141%

[xoggoth]

Not sure, 2 I would say. Since this interest is not subject to NI the amount you pay will be much the same as CT or income tax so I don't imagine HMRC will care. I have never found them too concerned with procedural details as long as the tax paid is right.

[minstrel]

Same subject as dude69's thread but slightly different question...

So, I closed my company down last year, all Corporation Tax paid, bank account cleaned out and closed.

As I paid my CT 9 months early, it's been earning interest and now the nice folks at HMRC have sent me a cheque for a few hundred quid on the interest earned.

Now, the cheque is made out to my old company and the bank account is closed. Spoke to bank, they said to get cheque re-issued in personal name. Spoke to HMRC, they said no problem send us a letter and we'll re-issue the cheque to Minstrel.

However, this few hundred quid is really income isn't it, so ordinarily MyCo should pay CT on the interest.

Should I:

1. Complete CT return for this year with only income the HMRC refund and pay the £50 odd CT. But hang on, if I do that and pay up straight then next year I'll get another refund for the interest on the £50. I'll need to do another CT return next year... and then the next... until eventually the CT is so small it gets rounded down to zero.

2. Declare it on my Self Assessment. As HMRC has re-issued the cheque to Minstrel, technically it is my personal income, not the company's.

3. Go down the pub and spend it quick before anyone notices.