Dormant or Close LTD company

[candy]

is your company name recognised by clients? If not, screw it. Close the company and when you need a new one, create it. The only other reason you might want to keep it is to preserve continuity if, e.g. you're applying for a mortgage.

But if you decide to make it dormant - ditch the accountant. The necessary work for a dormant company is negligible. It doesn't need an accountant.

Doesn't this matter how much money you have in your company?

If you have £300k... maybe live in Thailand/Singapore/Philippines for the next 6 months by the beach and pay yourself out with low taxes instead of UK taxes?

Possibly even take a free job for 4 hours hourly that you enjoy... that'll teach you some new job skills.

[Lance]

Thanks for replies so far. I have got quote from Accountant to close LTD company.

I have overall 70K in Business account and Accountant said roughly 48,000 in retained profit. He suggested to take MVL option, Ltd company closure charge 540 and insolvency fees 2,000 + VAT.

I and Mrs are 52-48% shareholders, would you suggest to utilise Director's personal tax allowance and Dividend to take number down to 25K and then go with Voluntary Strike Off option?

ask your accountant to run both ideas for you....
7.5% dividend tax is less than 10% CGT(with ER), so your suggestion makes sense, but your accountant will know all the facts. £48k retained from £70k doesn't sounds great though unless CT and VAT haven't been paid.

[bootham]

Thanks for replies so far. I have got quote from Accountant to close LTD company.

I have overall 70K in Business account and Accountant said roughly 48,000 in retained profit. He suggested to take MVL option, Ltd company closure charge 540 and insolvency fees 2,000 + VAT.

I and Mrs are 52-48% shareholders, would you suggest to utilise Director's personal tax allowance and Dividend to take number down to 25K and then go with Voluntary Strike Off option?

Thanks in advance.

[Lance]

Also applies if using ER to get money out of the company at reduced tax rate.

actually it's nothing to do with ER.
It's to do with taking the money out as a capital distribution. ER is a tax relief on that money, but not the actual reason you can't just start again.

[northernladuk]

Correct.

[mogga71]

Just close, make sure the bankaccount is empty before the company gets stricken off, because if you don't the money will go to HM government

If he has got £60k in the Company and is going to close it, then he is likely going to end up using an MVL. I think the MVL takes care of the money and therefore not possible to leave it all in Bank Account ... I believe.

[DimPrawn]

I would close. Investigating a dormant company is easy for HMRC, even going back 5 or 6 years. Investigating a closed company takes a lot more effort. Seeing HMRC like easy targets, I know which route I would go for.

[Eirikur]

Just close, make sure the bankaccount is empty before the company gets stricken off, because if you don't the money will go to HM government

[bootham]

thanks for replying.

I have little over £60K in Business account. My current mortgage deal runs for another 3 years.

I am keen to close LTD company as I do not see many clients giving contract Outside IR35 after Apr 2021.

[Hobosapien]

I think you're thinking about a 'phoenix' situation of closing one company then opening another doing the same type of work.

This only applies if you're trying to avoid paying debts, scamming people or out smart HMRC.

There's nothing to stop you closing a company because work has dried up then starting a new one because you've found work.

Also applies if using ER to get money out of the company at reduced tax rate.

[TheDogsNads]

Hi,

Apology if this has been discussed. With market dead and doesn't appear picking for quite sometime, I am thinking to close or dormant my ltd company. Accountant says they I can make it dormant so that I can resume anytime in future, they will charge half accountancy fees to run it. If I close now then I can't reopen another for sometime.

Thanks.

I think you're thinking about a 'phoenix' situation of closing one company then opening another doing the same type of work.

This only applies if you're trying to avoid paying debts, scamming people or out smart HMRC.

There's nothing to stop you closing a company because work has dried up then starting a new one because you've found work.

[northernladuk]

is your company name recognised by clients? If not, screw it. Close the company and when you need a new one, create it. The only other reason you might want to keep it is to preserve continuity if, e.g. you're applying for a mortgage.

But if you decide to make it dormant - ditch the accountant. The necessary work for a dormant company is negligible. It doesn't need an accountant.

What NAT says. I assume you don't have large reserves so just a matter of divi'ing the last of the money out so no issues about re-opening another. If you've got over£25k in it then its a different kettle of fish.

There is big difference between dormant and just leaving it do nothing so make sure you are using the correct terminology. There is a process to make it dormant and rules around it. Just not using it is different.

[NotAllThere]

is your company name recognised by clients? If not, screw it. Close the company and when you need a new one, create it. The only other reason you might want to keep it is to preserve continuity if, e.g. you're applying for a mortgage.

But if you decide to make it dormant - ditch the accountant. The necessary work for a dormant company is negligible. It doesn't need an accountant.

[bootham]

Hi,

Apology if this has been discussed. With market dead and doesn't appear picking for quite sometime, I am thinking to close or dormant my ltd company. Accountant says they I can make it dormant so that I can resume anytime in future, they will charge half accountancy fees to run it. If I close now then I can't reopen another for sometime.

Thanks.