Dissolving a limited company – balancing the balance sheet

[Shirty Girl]

I started a limited company a few years ago which I now want to dissolve because it is not trading. The company has not traded in the last 3 months.

I am the sole shareholder with 1,000 £1 shares which are not paid up.

I made an interest free loan to the company of which about £6,000 remains unpaid. I am the only creditor.

The company has tangible assets of about £500 and about £1,500 in the bank.

I plan to close the company bank account and transfer the funds to myself as payment against the outstanding loan. I also plan to transfer the ownership of the company’s tangible assets to me against the loan. The tangible assets are not stock. This leaves the company owing me £4,500. As a creditor I am happy to write the dept off. I am unclear about the best way to deal with the debt from the company’s perspective.

I think I have two options:

1) Dissolve the company with the £4,500 dept on the balance sheet. As I said, as a creditor, I am happy to write the dept off so obviously I won’t challenge the striking off. My concern with this course of action is that the written off debt may be classed as a benefit to the company and liable to tax.

2) To issue additional share capital up to a value of £3,500 that I as the only shareholder will then owe the company. This, together with the original £1,000 of shares, will mean that I owe the company £4,500 which equals what the company owes me as a creditor.

Any advice gratefully received.

Thanks,

Helen

[taxattack]

Option 1. Transfer the cash and assets to yourself and proceed with the winding up. No tax implications for the company.

Chris

[Jaykay]

No contest at all. Close the bank account and take the assets then close the company. Form 652a plus a tenner to Companies House. A couple of months later, company gone. I would write to the tax office to tell them what is going on but as you are the only loser, there is no problem.

You originally put your own (tax paid) money into the company which you cannot get out. The company is not making a gain as, presumably, the company has made a loss of £4,000 to date.