Closing Ltd Company Advice Needed

[littlelottie20]

Hello all
I am looking for advice on how to inform HMRC of non- trading status.
I have been running a LTd co for several years however since lockdown it has gradually declined to the stage that I had to go into full time employment a year ago to survive. I kept the business open in the hope of some sort of recovery but have not taken a wage since 2023. My year end was June 30th 2024 and since then I made a few transaction in July/August 2024 totalling less than £100.

I have just one creditor, the bank with a BBL. I need and want to close this business as it is not trading but I do not have the funds to employ an insolvency practitioner. I've read a little on the spongebob method and hope the bank may implement it but in the meantime how do I officially close the business with regards to HMRC?

I have been using my own money to pay the BBL but can no longer afford to do this but after researching it online it seems I can not be classed as non trading while i still owe money and transactions in the form of the monthly payment are still happening ?

My 23/24 accounts are due with HMRC in March this year.

Any advice much appreciated.

 

[ChrisCallaghan]

Hi @littlelottie20 , and welcome to UKBF.

Unfortunately the short answer is that you cannot successfully close the company whilst the BBL is outstanding.

You can certainly follow the steps in SpongeBob's guide, however I would instead suggest using the below template letter from Business Debtline, an established charity:

Considering strike off | Sample letter | Business Debtline

Use this letter to tell your creditors and members of your limited company that you are considering strike off.

businessdebtline.org

For now, banks that have provided BBLs are not coming forward to wind up companies (except in cases where they suspect suspicious activity relating to the BBL application and spending), but they and the Department of Business and Trade are objecting to any strike off action indefinitely. Essentially your company will be left in a state of limbo for an unknown period of time, at least until government policy on this issue changes.

It is still worth writing to creditors with the above template letter, and I would recommend sending a copy to HMRC. When you file your next accounts, you can record the company as dormant.

So long as the BBL is the only debt in the company's name, then you will receive the odd debt collection call and letter, but nothing too aggressive.

A few follow up questions to consider:

• Are you happy that the BBL amount you borrowed was in line with what your company was entitled to?
• Was it used solely for the benefit of your company?
• Does/did your company have any assets?
• Do you know the balance of your director's loan?

I do not have the funds to emply an insolvency practitioner.

Have you been given any quotes for a liquidation? If so, what sort of amounts have you been quoted?

 

[littlelottie20]

Hello Chris
Thank you for your quick response.
In answer to your follow up questions.

Yes the BBL was all above board and lent on our accounts at the time so nothing underhanded.
Was used solely for the company
No assets
There is no directors loan, infact I forgot to say I myself am a creditor of the company and I am owed over twice the amount of the BBL

I have not yet got a tailored quote although I am aware that it will be 3/4K and tbh I really cannot afford to lend any more to the business

 

[ChrisCallaghan]

I have not yet got a tailored quote although I am aware that it will be 3/4K and tbh I really cannot afford to lend any more to the business

I'd say you're in the right ballpark with that figure.

If that is not affordable, then keep to your original plan.

 

[littlelottie20]

I'd say you're in the right ballpark with that figure.

If that is not affordable, then keep to your original plan.

Thank you Chris, I will take a look at the template. regarding filing as dormant on CH, how does this affect HMRC? Do I have to still keep paying accountant each year to submit accounts with nothing on them except the same debt still showing?
Many thanks again

 

[Scalloway]

Do I have to still keep paying accountant each year to submit accounts with nothing on them except the same debt still showing?

Once the company has ceased trading and the figures for the final year of trading have been submitted the figures from year to year will not change. You can easily submit them yourself

how does this affect HMRC

Once the company has ceased trading you need to tell HMRC the company is dormant for tax purposes