Closing a LTD company with assets

[AncientMariner]

Hi,

I'm sorry if this has been raised before but I can't find a specific answer which relates to my query.

We've had a LTD co running for about 5 years, making a small profit. There is about £2k in profit sitting in the company after all corporation tax was paid and all accounts are up to date. We would like to cease trading and close the company. I know how to shut the company down/dissolve but what is the best way to take the money out of the company before closing it...remembering that we have already paid corportation tax on the profits the company now holds.

Thanks

 

[Mitchells Bristol]

Hello there

You can simply return the remaining funds/assets to the shareholders. This will be a capital transaction if done before the company is struck off, and if only £2,000 will be within the capital gains tax annaul exemption so there will be no capital gains tax to pay (assuming no other capital disposals) and no reporting requirement.

 

[Bob]

More info here

 

[AncientMariner]

Hello there
You can simply return the remaining funds/assets to the shareholders. This will be a capital transaction if done before the company is struck off, and if only £2,000 will be within the capital gains tax annaul exemption so there will be no capital gains tax to pay (assuming no other capital disposals) and no reporting requirement.

Hi, thanks for the info. I'm still learning this stuff so please bear with me!

You can simply return the remaining funds/assets to the shareholders..
There are only 2 shareholders..is this just a case of stating that a capital transaction of £2k amount was paid to the shareholders?
So providing I don't go above the CG limit, I will have no tax to pay on this at all? That sounds promising and pretty straightforward.

When you say no reporting requirement, what do you mean?

I will take a look at the link supplied but I'll need to register on that site and spend some time looking through it.

Thanks all.

 

[AncientMariner]

Update...

I see that as long as the amount paid out to shareholders is under £25k, there is no need to report to HMRC and we can just go ahead.

So the order should be something like this:

• Cease trading
• Do final tax return, including showing the money paid out to shareholders to clear everything off the company books
• Strike off company

I'll do this for our final return in Feb 2014.


If I am doing my own personal tax return, is there any need to mention the payments made from the company as they will be well under the CG limit?



Does that sound ok?

 

[NickMoore]

Would it not be easiest for the company just to pay a dividend of £2K?

 

[Bob]

Could be a higher rate liability on the dividend. Capital payment likely to be covered by annual CGT exemption.

 

[AncientMariner]

Hello again,

I'm currently preparing final accounts before closing the company.
I am trying to figure out how to take £2.5 retained profit/cash in bank and get this out of the company as share payment to directors as this will then be a capital gains payment rather than dividend.

How can this work via the balanace sheet through to completion of CT600? I have looked through all the help options and can't find a way of doing this.

Many thanks

 

[Mitchells Bristol]

Hello there

It does not form part of the CT600. The £2.5k is extracted as a final distribution from the company and this will be subject to either capital gains tax as a capital distribution or income tax as a dividend.

If you have no other capital disposals during the year, the £2.5k will fall within your annual exemption from capital gains tax and does not need to be declared on a tax return. You simply submit the DS01 form and then withdraw the remaining funds from the company.

If you are putting this into the accounts, you would simply show it as a dividend

 

[AncientMariner]

Hi taxonomy,

Thanks for the reply.

So to be clear, would it be fine for me to submit final accounts/CT600 leaving the £2.5k on the balance sheet and then send off the DS01 or would it be safer to put it through as a dividend to clear the balance sheet completely? My only concern is that if I put it through as a dividend there will be more dividend related tax paperwork to sort out.

If I can do the former (no dividend) then my paperwork is all set to go.


If I close the company with £2.5 assets, are HMRC going to come back later and ask about that? Would I simply tell them it was a share payment and put it on my personal tax return?

Sorry for all the questions - I'm close to shutting it all down and jsut want to get it right!

 

[Mitchells Bristol]

I would submit accounts as they stand, and then withdraw the £2.5k after you have submitted the closing accounts. The remaining funds pre-closure belong to the shareholders so there is no problem with withdrawing these and there is no need to report on your tax return as it will be below the reportable threshold

 

[AncientMariner]

Ok that's great. Will make my accounts a lot simpler too.
Much obliged.