Closing Company Before Annual Accounts

[I Am He]

Hi all,

It looks like a great resource here with all the brilliant information on these topics.

My company has ceased trading a few weeks ago as it is no longer viable and I have a different venture which is working out well and being managed properly.

My main question is: Can I start the process now of waiting 3 months and applying to strike off etc. before submitting my annual accounts?
My FY ended on 28th Feb meaning my books are due by 1st November. However, the accounts will generate a reasonable amount of Corporation Tax which I do not have in the company for various reasons and as the company needs to cease trading now, does that remove the liability to submit these books?
Is this still an HMRC debt even if not submitted/calculated?

Some other background/facts:

1. The DLA is currently 10k overdrawn (I have been in financial hardship, cannot pay this back presently)
2. I am currently 1k over my dividend allowance (I will have to move it over to the 'Salary' bucket I guess)
3. I have a VAT liability of around 7k due, I may have enough funds left to cover this so I am assuming I should do the right thing, pay this bill, as I think it may also mean I do not owe HMRC any money meaning they won't petition the strike off?

Many thanks in advance for your help.

 

[UK Contractor Accountant]

s this still an HMRC debt even if not submitted/calculated?

yes still a debt to HMRC at cessation date.

. The DLA is currently 10k overdrawn (I have been in financial hardship, cannot pay this back presently)

DLA likely to be £20K? plus once the ctax liability is taken into account for the 2017 year end

I am currently 1k over my dividend allowance (I will have to move it over to the 'Salary' bucket I guess)

not sure what this means. Dividend allowance is £5K but you will need to add your loan amount to your income if your DLA debt is written off/not paid back to the company.

I have a VAT liability of around 7k due, I may have enough funds left to cover this so I am assuming I should do the right thing, pay this bill, as I think it may also mean I do not owe HMRC any money meaning they won't petition the strike off?

Debts is due and payable. Would make sense to clear then apply for Strike Off hoping that HMRC miss the fact that a CT Return is due for the completed year.

 

[Gavin Bates]

Hi

As you may have seen on this forum many times before it is possible that HMRC could apply to liquidate the Company. If they do then the DLA become any issue as it is an asset and will be pursued by the liquidator.

Gavin

 

[I Am He]

Thanks so much for your help and response.

Re. the dividend allowance, my bad on the wording, I meant basically I'd taken £1k too much in dividends as per profits in the company at present.

OK, I will sit tight and wait out the rest of the 3 months before applying to strike off.

Do I still need to write the Spongebob letter to HMRC if I am going to settle the VAT payment beforehand? Or am I better off just paying it and applying and hoping I can stay under the radar?
I don't really want to get dragged through anything lengthy and complex.

Gavin, thanks for your input, I would really hope to avoid that. Could I put the DLA through as salary and account for the PAYE and NI against it instead? Would that remove the issue?

 

[UK Contractor Accountant]

Do I still need to write the Spongebob letter to HMRC if I am going to settle the VAT payment beforehand? Or am I better off just paying it and applying and hoping I can stay under the radar?

Don't send them any letters at this stage. Send them a copy of the strike off form once filed at Companies House.

 

[Gavin Bates]

Hi

Clearly, if you did that would be fine, but by the sounds of it you are then effectively paying all creditors in any event?

Gavin

 

[Jenni384]

You can't rewrite history and change a dividend / DLA to salary.
Anyway, there's actually a provision whereby if a company declares a salary in the knoweldge it can't afford to pay the tax and NI to HMRC, then the directors can become personally liable for it anyway. So it's not a good route, even if it was possible to backdate a salary. Sorry!

If you've taken too many dividends, then this just gets added to your DLA balance.

In terms of HMRC challenging the strike-off, it's not just the VAT that is a consideration, it's the Corporation Tax as well. Because the company has traded, HMRC will be expecting a CT return, and typically will object against the strike off on this basis.

Sadly, your DLA is an asset against which the HMRC debts are balanced. So while you *can* proceed with the Spongebob plan, you can't say the company has no assets, because it has.

But yes, if you've ceased trading, you can start the 3 month wait before applying to strike off. But HMRC may well object (whether they then follow through with that objection is another story!).

Gavin - there will be CT due as well as VAT, so not all creditors will have been paid.

Edited to add: Companies House won't care about filing accounts, once the DS01 is in.

 

[I Am He]

Thanks for all the info everyone, it's very useful albeit leaving me in a right conundrum of decisions!

I think as mentioned I will try for now to pay the debts that are due, ringfence anything that's left and then petition to strike off... and hope for the best. I will of course have to start making provisions to repay the DLA which I am not going to try and shirk away from.

 

[UK Contractor Accountant]

if the company gets struck off you don't need to worry about repaying your DLA - just declare the loan balance as income on your tax return and pay the personal tax due.

On £20K - tax due will be £1500 ( assuming you are basic rate tax payer and already using your £5K div allowance)

 

[UK Contractor Accountant]

So while you *can* proceed with the Spongebob plan, you can't say the company has no assets, because it has.

SB changed this to 'has no realisable assets' in his draft letter when the error of his ways was pointed out.

 

[Gavin Bates]

Jenni384,

Sorry you are correct I should have reread some of the earlier post and hadn't picked up the other debts.

Gavin