Closing a company - selling assets and VAT

[Clueless but learning]

I'm preparing to close my company as I am taking a new direction. It was really only set up as a hobby and the time has come to move on. I haven't done much trade. I have small losses and Directors' loans; no debts. To reduce these to zero, I was looking to 'sell' the company assets - PCs and stock. I'm a small publishing company and VAT registered. There is no VAT on the stock. Would I have to charge VAT on 'selling' the assets to myself to reduce the losses? I've heard of companies who will buy your Ltd company for up to £250 and they may even do your final accounts for free, but the company must have no losses, debts or assets. This would save me the expense of hiring an accountant. However, as I do my own accounts at the moment, I was planning to close the company myself - until I read about these 'we will buy your company' companies. Any help would be most grateful. Thank you in advance. :|

 

[yorkshirejames]

I've never heard about such people - but it sounds dodgy.

Sell the PC to yourself, and charge yourself VAT. Then carry on as you were.

 

[selfeax]

Agree with James - sounds rather dodgy!

As you are closing down the company, the transaction would not qualify as a Transfer of a going concern, so you would have to charge VAT on the sale of the assets.

Good luck with it all

 

[Tej]

Agree with the above posters.... sounds dodgy

The only reason they would pay £250 for your Company is because you are VAT registered. If you told them that you are going to apply for de-registration before you sold it ... you would not get tuppence

IMHO

 

[David Griffiths]

Deregister for VAT first, on the grounds that company is longer making taxable supplies.

Normally you have to account for VAT on the value of all stock and assets when you deregister. However, if the VAT due would be less than £1,000 you don't have to pay any. See Section 6.7 here.

Then transfer the computer to yourself and get the company struck off - use form DS01 Costs £10 and no need to involve anybody else.

 

[Clueless but learning]

Many thanks for all the posts - I will take your advice. The assets are fully depreciated on my accounts, but still have approx £500 to be written down on my tax return for capital allowance - so there will be no VAT payable on the sale. I'll also steer clear of the companies offering to buy Ltd companies.

 

[Tej]

Many thanks for all the posts - I will take your advice. The assets are fully depreciated on my accounts, but still have approx £500 to be written down on my tax return for capital allowance - so there will be no VAT payable on the sale. I'll also steer clear of the companies offering to buy Ltd companies.

You can bet your bippie.. that you would not be able to sell a Ltd Company for any value.. unless it was registered for VAT.

 

[Spongebob]

You can bet your bippie.. that you would not be able to sell a Ltd Company for any value.. unless it was registered for VAT.

The only reason I can think of for someone paying good money for a dead company is if it was carrying a load of retained losses but had no debts...

 

[Tej]

The only reason I can think of for someone paying good money for a dead company is if it was carrying a load of retained losses but had no debts...

But would the new owners be able to use those retained losses?..

I know you are more "ofay" with this kinda stuff

 

[David Griffiths]

But would the new owners be able to use those retained losses?..

I know you are more "ofay" with this kinda stuff

Probably not. There is a restriction somewhere that if a company's trade falls to a low level, and the company is then sold, the new owners will not get full use of the losses. I'd have to check exact details, but that's the gist of it.

 

[Tej]

Probably not. There is a restriction somewhere that if a company's trade falls to a low level, and the company is then sold, the new owners will not get full use of the losses. I'd have to check exact details, but that's the gist of it.

Thanks

I had a feeling that one could not do that...

 

[Clueless but learning]

This is the company I happened across when googling info on closing a company >>> sellyourcompany ..../closing?gclid=CI E9pSh9p4CFUoB4wodj3h4JA

(there is . co . uk after company and before /closing. I haven't had 15 posts yet to post the full URL and it won't let me save the post until I've taken out anything that looks like a web address.)

I'm normally sceptical about these offers, but it did seem to be all above board. Any views?

 

[yorkshirejames]

http://www.sellyourcompany.co.uk/closing?gclid=CI E9pSh9p4CFUoB4wodj3h4JA

Upto are the operative words!

 

[elaine@cheapaccounting]

I have no idea why a firm of accountants would do this. Happy to be enlightened though.

My advice would be if you go down this route make sure all Co House paper work and share transfers are completed correctly and that there is a legal agreement in place limiting your liability to the date you sell the company.

Make sure it covers e.g. who files outstanding accounts, pay taxes etc

 

[Clueless but learning]

Many thanks for all replies - and Happy New Year.

Kind Regards

 

[yorkshirejames]

I have no idea why a firm of accountants would do this. Happy to be enlightened though.

My advice would be if you go down this route make sure all Co House paper work and share transfers are completed correctly and that there is a legal agreement in place limiting your liability to the date you sell the company.

Make sure it covers e.g. who files outstanding accounts, pay taxes etc

Absolutely all seconded. I do wonder whether there is a shady angle to this sort of thing. I can (sort of) understand the benefits in having a clean company with good service history, but it seems just a little strange that someone would go to all the hassle - especially the present director going to all the hassle for a couple of hundred quid.

 

[elaine@cheapaccounting]

Absolutely all seconded. I do wonder whether there is a shady angle to this sort of thing. I can (sort of) understand the benefits in having a clean company with good service history, but it seems just a little strange that someone would go to all the hassle - especially the present director going to all the hassle for a couple of hundred quid.

I would love to know the reason - there must be something.

Years ago when you had off the shelf cos then maybe but the benefits of this v risks just doesn't seem to stack up.

 

[Clueless but learning]

Absolutely all seconded. I do wonder whether there is a shady angle to this sort of thing. I can (sort of) understand the benefits in having a clean company with good service history, but it seems just a little strange that someone would go to all the hassle - especially the present director going to all the hassle for a couple of hundred quid.

Like I say - Clueless but learning. I am a complete novice and received poor advice on beginning a company and now I'm trying to make sure that I get good advice before moving forward. I posed the question on this forum because I wanted to question whether this was the norm and I want do the the right thing for the least cost, and this company seemed to offer everything. Who would blame me for being interested in a company to do my accounts for free - accounting charges seem to be so expensive for the very small amount of work that I need done. Obviously it's not the norm and I thank those who have provided me with good clear advice. There is certainly nothing strange or shady on my part - just looking to understand the process and do the right thing for the least cost - nothing more, nothing less.

 

[elaine@cheapaccounting]

Hey we weren't having a go at you ...

I for one like to learn new things and if there is some reason why this firm offering such a service then I would love to know as part of my continuing learning. Hence my post.

But as you can see - a few of us are a bit mystified as to the benefits.