Reply to: Closing a company after 14 months - that I didn't use at all

[Jeremiah@RHJAccountants]

I'm seeing the opposite - Companies House are striking companies off much quicker if the annual return isn't filed. We had a company just today who was struck off for not filing an annual return, and they have never filed accounts or a CT return with HMRC either. There are taxes owed too.

Just to jump of the back of this i am seeing this too with companies.

I do think it is a shame that this can still be allowed in this day and age.

It has now got to the point when i have even seen a plan on an internet forum of how to get your company dissolved without paying the taxes owed!

[Clare@InTouch]

Hi Clare - Is this a new(ish) company? It's disappointing if that's the case, very poorly organised and unfair on the contractors that do things properly.

Incorp in 2012. The client was one of those that ignored all our reminders and attempts at contact, never did anything on time, and finally Companies House dissolved the company when the annual return was 6 months late.

[Martin at NixonWilliams]

I'm seeing the opposite - Companies House are striking companies off much quicker if the annual return isn't filed. We had a company just today who was struck off for not filing an annual return, and they have never filed accounts or a CT return with HMRC either. There are taxes owed too.

Hi Clare - Is this a new(ish) company? It's dissappointing if that's the case, very poorly organised and unfair on the contractors that do things properly.

[Clare@InTouch]

Companies House have completely changed their approach to offending companies.

In 2010 they would dissolve companies far too easily, and many companies would get away with unpaid taxes. Nowadays, the striking off is suspended - It has been years since I have seen a company struck off without their returns and/or taxes being up to date.

I'm seeing the opposite - Companies House are striking companies off much quicker if the annual return isn't filed. We had a company just today who was struck off for not filing an annual return, and they have never filed accounts or a CT return with HMRC either. There are taxes owed too.

[Martin at NixonWilliams]

Companies House have completely changed their approach to offending companies.

In 2010 they would dissolve companies far too easily, and many companies would get away with unpaid taxes. Nowadays, the striking off is suspended - It has been years since I have seen a company struck off without their returns and/or taxes being up to date.

[Platypus]

Surely Companies house will strike it off anyway for not filing and HMRC will probably have no objections on CT.

Yes, I believe that's what happens.

In a report published ... found that in the year to March 2010 more than 500,000 firms were dissolved after failing to file accounts with Companies House.

“Rather than chase or prosecute them Companies House simply gets rid of the offending companies – so sweeping the problem of non-compliance with the law out of view,” the report concluded.

[Martin at NixonWilliams]

Interesting...so that would effectively mean needing to find the cash to repay the company prior to commencing winding up proceedings, only to get the cash back again after the winding up is completed?

Would it be easier to simply declare a dividend to clear the loan then, assuming there is enough retained profit to do so?

That is my understanding and yes, it is easier to declare a paper only dividend however if you can afford to repay the loan then in most cases that would be better if the funds can then be taken with entrepreneurs relief etc. (as opposed to paying the tax on the dividend).

[TheCyclingProgrammer]

I agree that the payments would be treated as loans but you cannot clear the loan as part of the distribution. In order for the distibution to take place all debtors and creditors should be cleared - This includes any directors loans.

Interesting...so that would effectively mean needing to find the cash to repay the company prior to commencing winding up proceedings, only to get the cash back again after the winding up is completed?

Would it be easier to simply declare a dividend to clear the loan then, assuming there is enough retained profit to do so?

[Martin at NixonWilliams]

Indeed. The concept of drawings is a self employed one, so any payments that aren't wages or dividends are a loan. The loan would then be repaid by a distribution of capital upon closure.

I agree that the payments would be treated as loans but you cannot clear the loan as part of the distribution. In order for the distibution to take place all debtors and creditors should be cleared - This includes any directors loans.

[Clare@InTouch]

I think its reasonable to assume that in the absence of payroll or the correct dividend paperwork, that any other drawings are treated as a director's loan.

Indeed. The concept of drawings is a self employed one, so any payments that aren't wages or dividends are a loan. The loan would then be repaid by a distribution of capital upon closure.

[TheCyclingProgrammer]

As long as it's correctly accounted for, then there is no difference. However, if there is nothing which indicates what happened to the money, that doesn't seem right to me.

I think its reasonable to assume that in the absence of payroll or the correct dividend paperwork, that any other drawings are treated as a director's loan.

[TheFaQQer]

Does it matter for £40? It can be treated as a directors loan which is cleared by the distribution of the capital on winding up, surely?

As long as it's correctly accounted for, then there is no difference. However, if there is nothing which indicates what happened to the money, that doesn't seem right to me.

[TheCyclingProgrammer]

Salary, dividend or directors loan?

What paperwork did you complete when you took the company money?

Does it matter for £40? It can be treated as a directors loan which is cleared by the distribution of the capital on winding up, surely?

[Boney M]

Surely Companies house will strike it off anyway for not filing and HMRC will probably have no objections on CT.

[TheFaQQer]

I closed the bank account already by taking out the GBP 40 to my own account

Salary, dividend or directors loan?

What paperwork did you complete when you took the company money?