Reply to: Closing down company

[thanos]

Thanks Taxless for your taking the time to post. Your tips have been extremely helpful. I believe I now have what I need to make an application, so here goes. Will keep you posted if I do run into any trouble.
And thanks to the others for chipping in as well.

If you have an asset in the ltd co say a laptop, can we sell it to the director ie myself at a discount price?

[ntronic]

If you wanted to be fancy on the question of being dissolved, you could mention that this would be under the Companies Act 2006 s1003 (previously Companies Act 1985 Section 652A).

I would make some mention of the fact that the application is being made under ESC C16.

You might mention that the company will not transfer or sell its assets to another company that has some or all of the same shareholders as yours and that the company is not involved in a scheme of reconstruction.

You should mention that the final CT return will be submitted ASAP.

The template letter mentions that you will distribute (or have already done so). You can distribute at any time and hope for the best but IMO you should NEVER do this in advance of HMRC cearance.

If you distribute today and ESC C16 is repealed before you get HMRC clearance the distribution doesn't escape just because it was made before HMRC came back to you.

At best, they might argue it was a loan to a director with a 25% tax charge to the company, or they might argue it was salary liable to PAYE & NIC.

Get the application in ASAP, they usually come back to you within 2 or 3 weeks and sometimes quicker. You can then distribute knowing you have got capital treatment.

You should also be OK to qualify for Entrepreneurs Relief on the distribution and hence the effective 10% tax rate, after deducting your annual CGT exempt amount, if it is still available, provided the figure involved is not huge.

Thanks Taxless for your taking the time to post. Your tips have been extremely helpful. I believe I now have what I need to make an application, so here goes. Will keep you posted if I do run into any trouble.
And thanks to the others for chipping in as well.

[xoggoth]

I expect the final balance sheet has to balance to 0.000001p or they make you go back and do all the 20 years accounts again.

[xoggoth]

Cheers. Not another CT return, just driven mad by last one!!!

[Taxless]

Cheers ASB. No CGT implications as the only distribution is £320 of equipment and I gather there is a lower CGT limit of around £10k. Plus cash of £430 which is not taxable since it was for the tax free online filing incentive years I didn't claim. Just don't want to get things in wrong order and end up filling in more forms than I have to. So will:

a) Write to HMRC as above.
b) Once told no tax owed either way, close bank account.
c) Inform Co Hse on their form. Presumably also submit last accounts?

The £430 will now form part of the capital distribution. You are effectively distributing all of the value left in the company in exchange for your shares.

The total is well under the CGT exempt amount of £10,600 for this tax year so no CGT to pay.

You need to send in the final accounts/CT return.

[ASB]

Xog,

I must confess I didn't actually do the last part of 3. My accountants submitted the accounts at the normal time and I then went through the process with HMRC. Obviously during this period customers were paying their bill and I was paying what was outstanding - but given the dates of the invoice these were obviously all in this set of accounts.

I then the cash except for the £15 for companies house. Filled out the form and sent it with the company cheque to co house.

I didn't bother with the final accounts (I'd have had to figure out how to do them myself and as far as I could tell I'd just end up with a set of accounts with zeroes everywhere). Bit naughty I know. After the form went to CH I did get a letter from HMIT asking for confirmation that there had been no trading since the last accounts and confirming that the CT was up to date on this basis.

The also confirmed they would pay the on line filing incentives when due to me personally (but didn't and I couldn't be bothered to chase it).

[xoggoth]

Cheers ASB. No CGT implications as the only distribution is £320 of equipment and I gather there is a lower CGT limit of around £10k. Plus cash of £430 which is not taxable since it was for the tax free online filing incentive years I didn't claim. Just don't want to get things in wrong order and end up filling in more forms than I have to. So will:

a) Write to HMRC as above.
b) Once told no tax owed either way, close bank account.
c) Inform Co Hse on their form. Presumably also submit last accounts?

[ASB]

Thanks. I just came back here to say that was rubbish as it doesn't square with Co hse guidance, among other things you have to distribute assets before dissolving company or the crown has em and I don't want the queen having my 2000 Win98 Toshiba laptop.

Just can't discover which office in HMRC to send to at mo.

PS
That's a bummer, it was them just gave me above advice. In fact I phoned the number of my CT form and they noted my intention. Now I have to write to the same person implying the advice she gave me was crap?

Xog,

Don't apply to CoHse for striking off until you have got clearance and then disbursed the assets and all the cash in the various bank accounts. We do quite regularly get post from people who have done it in the wrong order and then have to go through the considerable reinstatement pain to try and get the cash back.

In terms of who to write to I just wrote to the named HMIT on the office that sent me my corp tax stuff. Sent a very brief letter including most of the stuff taxless has mentioned. After about 3 weeks they wrote back saying "yes that's fine".

I am assuming the funds you are going to distribute won't give you a CGT problem after making use of all the available allowances?

I have been told - but wouldn't like to rely upon it - that it is permissible to make 2 distributions in different tax years to get around this (obviously lengthening the process). To be honest it seems unlikely to work to me and the CGT I needed to pay was too small to worry about it anyway.

[Taxless]

Remember you are dealing with a faceless institution.

The person you spoke to will not deal with the application as they are not technically competent, as illustrated by their previous response.

I get contacted by HMRC quite frequently with queries and am given the name of the person I was speaking to and am told to ring back between certain times of the day.

When I do so, I am told a variety of, “they are not dealing with this matter, you can’t speak to them, there is no one of that name working here! “

[xoggoth]

Sorry, but I hope you got their name so you know who to complain to when it goes belly up?

Thanks. I just came back here to say that was rubbish as it doesn't square with Co hse guidance, among other things you have to distribute assets before dissolving company or the crown has em and I don't want the queen having my 2000 Win98 Toshiba laptop.

Just can't discover which office in HMRC to send to at mo.

PS

To the company's usual CT tax district

That's a bummer, it was them just gave me above advice. In fact I phoned the number of my CT form and they noted my intention. Now I have to write to the same person implying the advice she gave me was crap?

[Taxless]

Not sure it isn't rather simpler than above. I phoned HMRC to try which dept find I had to send application too and they told me I didn't need to, just notify Cos Hse who would notify them and I would get sent anything necessary.

!!!

Sorry, but I hope you got their name so you know who to complain to when it goes belly up?

When you ring HMRC you get a Helpline, never the coal face.

They will try to help as much as they can but they are not technically trained and I am afraid that for an issue like this you are not going to get the advice you need.

As far as the Companies House side of things is concerned then yes contact them, or short cut it and do it yourself from the earlier link I gave. This takes care of killing the company off from that side, but it has nothing to do with tax and they won't agree to striking off the company until HMRC give the OK.

ESC C16 is an extra-statutory CONCESSION. HMRC don't have to agree to an application and have no reason to encourage cpmanies to submit them and certainly won't prepare a draft clearance letter for you because they can't give advice.

ESC C16 is there to help you get the application correct first time which should also help HMRC process applications quickly.rmal application that has to be made to HMRC not Companies

By taking the initiative and sending in the application now, to the company's usual CT tax district, you set the ball rolling and hopefully get capital treatment agreed before the Concession is restricted when it becomes part of formal legislation.

[xoggoth]

Not sure it isn't rather simpler than above. I phoned HMRC to try which dept find I had to send application too and they told me I didn't need to, just notify Cos Hse who would notify them and I would get sent anything necessary.

[Taxless]

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

If you wanted to be fancy on the question of being dissolved, you could mention that this would be under the Companies Act 2006 s1003 (previously Companies Act 1985 Section 652A).

I would make some mention of the fact that the application is being made under ESC C16.

You might mention that the company will not transfer or sell its assets to another company that has some or all of the same shareholders as yours and that the company is not involved in a scheme of reconstruction.

You should mention that the final CT return will be submitted ASAP.

The template letter mentions that you will distribute (or have already done so). You can distribute at any time and hope for the best but IMO you should NEVER do this in advance of HMRC cearance.

If you distribute today and ESC C16 is repealed before you get HMRC clearance the distribution doesn't escape just because it was made before HMRC came back to you.

At best, they might argue it was a loan to a director with a 25% tax charge to the company, or they might argue it was salary liable to PAYE & NIC.

Get the application in ASAP, they usually come back to you within 2 or 3 weeks and sometimes quicker. You can then distribute knowing you have got capital treatment.

You should also be OK to qualify for Entrepreneurs Relief on the distribution and hence the effective 10% tax rate, after deducting your annual CGT exempt amount, if it is still available, provided the figure involved is not huge.

[xoggoth]

Closing mine down too. Some good stuff here, thanks Taxless. Now if only I could figure out how to show fixed assets when you make a revaluation I would be almost there.

[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.