Dissolving a company - advice appreciated

[anonuk]

Evening all…

One of the companies I own has unfortunately been unable to recover following Covid/cost of living and I’ve made the decision to close it down (companies house actually began the process of striking it off for failure to submit accounts a year ago, though hmrc have objected so far).

There’s a few questions I have which I’d like some thoughts on…

1) the company has a BBL with an outstanding balance of £24k. Now, since receiving the BBL, I changed the company name at Companies House but never got round to changing it with the bank (mainly due to needing to fill in paper forms). As a result, the bank don’t seem to have objected to the strike off. Do I need to tell them of the name change?

2) the company has a couple of trademarks, as well as a website (and trading name which is the companies ltd company name) that I’d like to transfer to my other company. The trading name doesn’t currently get any sales (part of the problem) but I’d like to retain it anyway. What would the ‘legal’ way be of doing this? Would I need to buy the trading name and trademarks of the company before it dissolves?

3) the BBL repayments aren’t my biggest concern but through stupidness and ill placed trust in an accountant, the corporation tax returns were never filed so it’s the 5 years of penalties for not filing accounts with HMRC I’m hoping to avoid by letting the company fold. Is there any other way of dealing with this that would result in being able to keep the company alive?

I have informed HMRC that the company is currently not trading so they’ve said I don’t need to submit tax returns while it’s not trading but that doesn’t do anything about the previous 5 years.

 

[Lisa Thomas]

Hi

Bit busy so keeping responses short and sweet:

1. No - no point.

2. Yes. After it's dissolved the assets will vest in Bona Vacantia.

3. You could file all the returns and pay and penalties/taxes/interest due. That will still leave the company with the BBL debt...

 

[ChrisCallaghan]

I was likewise thinking of quick and short answers to this, but @Lisa Thomas has beat me to it! ?

 

[DontAsk]

The trading name is just a name, surely anyone can use it. The old company is not in a position to object.

Similarly with the trademarks. Who's going to object if you started using them, unless someone else manages to buy or re-register them.

 

[ChrisCallaghan]

Depends on how much future proofing OP wants to do.

the corporation tax returns were never filed so it’s the 5 years of penalties for not filing accounts with HMRC I’m hoping to avoid by letting the company fold.

HMRC may choose to to wind up the company through court (aka compulsory liquidation), and from there the director would then be subject to re-use of company name (including trading styles) restrictions. Full guidance below:

Re-use of company names

www.gov.uk

This will only apply if/when the company enters into liquidation.

Who's going to object if you started using them, unless someone else manages to buy or re-register them.

In a similar vain, if OP takes assets (e.g. trademarks & websites) out of this company, it would be better for him to demonstrate that he bought them to any potential future liquidator, rather than removing them for no consideration.

 

[anonuk]

Hi

Bit busy so keeping responses short and sweet:

1. No - no point.

2. Yes. After it's dissolved the assets will vest in Bona Vacantia.

3. You could file all the returns and pay and penalties/taxes/interest due. That will still leave the company with the BBL debt...

Thanks Lisa, very much appreciated. Is there a general rule of thumb for working out the value of trademarks and trading name?

 

[anonuk]

Depends on how much future proofing OP wants to do.



HMRC may choose to to wind up the company through court (aka compulsory liquidation), and from there the director would then be subject to re-use of company name (including trading styles) restrictions. Full guidance below:

Re-use of company names

www.gov.uk

This will only apply if/when the company enters into liquidation.



In a similar vain, if OP takes assets (e.g. trademarks & websites) out of this company, it would be better for him to demonstrate that he bought them to any potential future liquidator, rather than removing them for no consideration.

Is it likely that hmrc will wind the company up if a tax return has never been submitted as they’ll have no idea whether there’s actually anything worth investigating? The only benefit I can see is they can investigate the usage of the BBL which was all above board.

Thanks for that link, I’ll have a read. One quick question though - how would the above be affected if I were to apply for the company name to be changed at Companies House prior to the company being dissolved? Would I be able to use it then? Would they even allow that while accounts and confirmation statements are outstanding and a pending strike off?

 

[WaveJumper]

Not sure I understand the need to save the company name, website and trademarks are you thinking of resurrecting the company and starting again

 

[Lisa Thomas]

Thanks Lisa, very much appreciated. Is there a general rule of thumb for working out the value of trademarks and trading name?

Hi Anonuk

It's not something I am qualified to do. You would need to ask an agent for a professional valuation, as any potential future claim of a transaction at an undervalue would need to be able to stand up to scrutiny. I can recommend on if you dm me but they will need paying...

 

[anonuk]

Not sure I understand the need to save the company name, website and trademarks are you thinking of resurrecting the company and starting again

Basically, the trademark and trading name is that of the previous ltd company name (before the company name was changed with companies house). My other company has the sole use of that trading name now but the trademark is still owned by this company. I’d always planned to transfer the trademark but never got round to it but obviously don’t want to lose the trademark as the other company has spent 3 years building a brand with it. The website is ‘owned’ by my other company that uses the trademark so if you do a Whois lookup of the domain, the owner is my other company.

 

[Newchodge]

Is it likely that hmrc will wind the company up if a tax return has never been submitted as they’ll have no idea whether there’s actually anything worth investigating? The only benefit I can see is they can investigate the usage of the BBL which was all above board

Either the BBL was obtained fraudulently, or there has been a substantial amount of trading going on. I would have thought HMRC would put those 2 bits of information together?

 

[ChrisCallaghan]

Is it likely that hmrc will wind the company up if a tax return has never been submitted as they’ll have no idea whether there’s actually anything worth investigating?

Yes, for the exact reason you've mentioned I am afraid. They have no idea what's happened, and the only why to find out would be to trigger an investigation by winding the company up. Whether they actually go for a winding up petition though is pot luck, however I have seen HMRC wind up companies in the past exactly for this reason.

One quick question though - how would the above be affected if I were to apply for the company name to be changed at Companies House prior to the company being dissolved? Would I be able to use it then? Would they even allow that while accounts and confirmation statements are outstanding and a pending strike off?

As I'm an insolvency advisor and not a solicitor, I tend to stay clear of advising on ways of working around re-use of company name issues. The full rules are included in the link I provided, and I can recommend a solicitor for advice if you need, though they will charge for the advice.

 

[Richard Dastardly]

Evening all…

One of the companies I own has unfortunately been unable to recover following Covid/cost of living and I’ve made the decision to close it down (companies house actually began the process of striking it off for failure to submit accounts a year ago, though hmrc have objected so far).

There’s a few questions I have which I’d like some thoughts on…

1) the company has a BBL with an outstanding balance of £24k. Now, since receiving the BBL, I changed the company name at Companies House but never got round to changing it with the bank (mainly due to needing to fill in paper forms). As a result, the bank don’t seem to have objected to the strike off. Do I need to tell them of the name change?

2) the company has a couple of trademarks, as well as a website (and trading name which is the companies ltd company name) that I’d like to transfer to my other company. The trading name doesn’t currently get any sales (part of the problem) but I’d like to retain it anyway. What would the ‘legal’ way be of doing this? Would I need to buy the trading name and trademarks of the company before it dissolves?

3) the BBL repayments aren’t my biggest concern but through stupidness and ill placed trust in an accountant, the corporation tax returns were never filed so it’s the 5 years of penalties for not filing accounts with HMRC I’m hoping to avoid by letting the company fold. Is there any other way of dealing with this that would result in being able to keep the company alive?

I have informed HMRC that the company is currently not trading so they’ve said I don’t need to submit tax returns while it’s not trading but that doesn’t do anything about the previous 5 years.

Regarding the trademarks, if they aren't the Ltd company name, then who is going to know about them unless you tell them? Just change the ownership at IPO

 

[Richard Dastardly]

Oh and by the way, if you are going to go down the professional liquidation route then make sure you have a contract of employment for yourself before you do it - if you are paying yourself a director's salary in particular. Include holiday pay in it. Then you can claim redundancy from the redundancy service and loss of holiday and loss of no notice.

And get your book-keeping and accounts in order, no directors loans.

 

[anonuk]

Either the BBL was obtained fraudulently, or there has been a substantial amount of trading going on. I would have thought HMRC would put those 2 bits of information together?

Thanks - the BBL wasn’t obtained fraudulently. The company had a turnover of £107k in 2019 and took out a £25k BBL. The BBL was used to pay the companies bills while we were unable to open during lockdowns, and unfortunately despite spending money on a website, have been unable to make any sales online. In the past 2 years, the company has not made a single sale, which I’ll admit is in part due to putting all my effort into the company that actually employs people and has wages etc to pay.

 

[anonuk]

Oh and by the way, if you are going to go down the professional liquidation route then make sure you have a contract of employment for yourself before you do it - if you are paying yourself a director's salary in particular. Include holiday pay in it. Then you can claim redundancy from the redundancy service and loss of holiday and loss of no notice.

And get your book-keeping and accounts in order, no directors loans.

Thanks. I won’t be going down the professional liquidation route as unfortunately there’s no money to pay for it.

 

[ChrisCallaghan]

Then you can claim redundancy

As I understand, there's a six month time limit, and OP has advised the company hasn't made a sale in 2 years, so I'm assuming it may also be some time since the company was able to pay them a PAYE salary.

 

[anonuk]

As I understand, there's a six month time limit, and OP has advised the company hasn't made a sale in 2 years, so I'm assuming it may also be some time since the company was able to pay them a PAYE salary.

The company has never paid me any wages as I’ve always taken my wage from the other company, so no redundancy available.

 

[Newchodge]

Thanks - the BBL wasn’t obtained fraudulently. The company had a turnover of £107k in 2019 and took out a £25k BBL. The BBL was used to pay the companies bills while we were unable to open during lockdowns, and unfortunately despite spending money on a website, have been unable to make any sales online. In the past 2 years, the company has not made a single sale, which I’ll admit is in part due to putting all my effort into the company that actually employs people and has wages etc to pay.

But there has been no tax return for 5 years?

 

[WaveJumper]

But there has been no tax return for 5 years?

I am little confused how a company could obtain a BBL and yet not have filed any accounts for 5 years, what were the banks actually checking

 

[Newchodge]

I am little confused how a company could obtain a BBL and yet not have filed any accounts for 5 years, what were the banks actually checking

Their profit margins

 

[Lisa Thomas]

I am little confused how a company could obtain a BBL and yet not have filed any accounts for 5 years, what were the banks actually checking

They weren't...