Toggle sidebar

How to end company

Sort by date Sort by votes
M

Mozz01

Free Member
Apr 14, 2023
26
1
So my brothers now after a successful star in a mess

He’s working for nothing his small business is costing money to run and after spending all his savings and borrowing from me he’s finally accepting it has to end.

It’s a very small business, one part time staff as far as I’m aware the debts that will be outstanding is 2 months lease, electric and water ( about £2500)

I could probably cover these if it would make it easier

I suspect his tax will be a mess though as he’s not had an accountant this year and as money comes in it’s been shifted around to cover home bills etc and vice versa

He needs to get out and get a job asap any advice of best way to end business?

Ltd company he’s only director no staff as such could finish with no debt if I give him the money but the tax will be a problem going forward I think

Thanks
 
What use is an accountant now?

He’s bust, from what I’m reading he can’t desolve as there’s debts and he can’t afford an IP

I’m unsure whether to pay the debts or pay for the insolvency practitioner
 
Upvote 0
Although the debts are estimated at c32.5k, if he hasn't been dealing with the company's taxes properly there may well be some company taxes owed to HMRC.

Is the company VAT registered?

Are there any employees?

Has he been drawing any money out of the company? If so he might owe an overdrawn directors loan back to the company.

Lots of questions need answering to be able to give advice.

Ideally your brother should be speaking to an IP before deciding that Liquidation is not appropriate.
 
Upvote 0
Lisa Thomas said:
Although the debts are estimated at c32.5k, if he hasn't been dealing with the company's taxes properly there may well be some company taxes owed to HMRC.

Is the company VAT registered?

Are there any employees?

Has he been drawing any money out of the company? If so he might owe an overdrawn directors loan back to the company.

Lots of questions need answering to be able to give advice.

Ideally your brother should be speaking to an IP before deciding that Liquidation is not appropriate.
Click to expand...
Hi thanks for reoly

Yes VAT reg but turnover this year way below the 85k

Staff minimum and part time ie his daughter helps out at times

As for taking money out, he was paye to start with but for months has been unable to pay himself as takings dropped, it’s been a case of after a weekend any money taken goes on stock for the next week etc I genuinely think he’s operating at a loss this year

Spoke with him last night debts are circa 5k which are just operating expenses like rent, electric etc no credit accounts

Not sure what tax or vat would be due but this year I’d estimate takings 1.5k to 2k a month
 
  • Like
Reactions: Lisa Thomas
Upvote 0
If he is VAT registered, even if the turnover is £100 he has to account for VAT.
 
  • Like
Reactions: Lisa Thomas
Upvote 0
Has he continued to run payroll, even if he could not take the money, so the company owes him money?
 
Upvote 0
Sounds like it might be a case for dissolving the company but I would want to speak to him to get more facts before giving that advice.

See here:

- YouTube

Enjoy the videos and music that you love, upload original content and share it all with friends, family and the world on YouTube.
youtu.be youtu.be

and here:

www.gov.uk

Guidance for limited companies, partnerships and other company types

Guidance about registering, filing and disclosing information with Companies House.
www.gov.uk www.gov.uk
 
  • Like
Reactions: Mozz01
Upvote 0
Mozz01 said:
Don’t think so, at least not last few months
Click to expand...
He can still put that right, at least for the money he has taken out since April, which will reduce some of the tax liabilities.
 
Upvote 0
Mozz01 said:
I guess not being able to afford an accountant
Click to expand...
Unfortunately that's not considered an acceptable excuse. I believe it's a legal requirement as the company will have been acting as agent in relation to the VAT collected/due to HMRC.
 
  • Like
Reactions: Mozz01
Upvote 0
Lisa Thomas said:
Unfortunately that's not considered an acceptable excuse. I believe it's a legal requirement as the company will have been acting as agent in relation to the VAT collected/due to HMRC.
Click to expand...
I do have SOME money I’m willing to help him with

It’s seems on odd situation to pay an accountant to sort out what tax/vat is owed when he isn’t in a position to to pay it
 
Upvote 0
Mozz01 said:
I do have SOME money I’m willing to help him with

It’s seems on odd situation to pay an accountant to sort out what tax/vat is owed when he isn’t in a position to to pay it
Click to expand...
I haven't suggested that.

I'm just setting a reminder that when someone is a director of a VAT registered Limited Company, they have a duty to ensure the VAT returns are submitted.

This ensure the tax affairs are up to date and HMRC are aware how much tax is owed.
 
  • Like
Reactions: Elliot Green
Upvote 0
Upvote 0
Lisa Thomas said:
Where does it say that, please?
Click to expand...
AI Overview
+4



No, you cannot strike off a limited company if it owes money to HMRC
, as the company must not have any outstanding debts to creditors to be eligible for this process. Attempting to do so will result in HMRC objecting to the strike-off application, which will suspend the process. If the company is insolvent, you must explore a formal process like Creditors' Voluntary Liquidation (CVL).
 
Upvote 0
Mozz01 said:
AI Overview
+4



No, you cannot strike off a limited company if it owes money to HMRC
, as the company must not have any outstanding debts to creditors to be eligible for this process. Attempting to do so will result in HMRC objecting to the strike-off application, which will suspend the process. If the company is insolvent, you must explore a formal process like Creditors' Voluntary Liquidation (CVL).
Click to expand...
That is a CVL. You would not be looking at a CVL.
 
Upvote 0
Mozz01 said:
No it’s striking off

I know is only AI but it states you cannot strike off if there are debts, instead you need to go down the CVL route instead
Click to expand...
Which is why you should not take advice from AI, because on this occasion it is wrong.
Yes you can apply to dissolve a Company even if it has debts, you just have to make sure you write to all the Creditors telling them your intensions which gives them the chance to object if they so wish.
HMRC do not always object if the Company owes them money, I have just had a Company dissolved with Companies House who have an outstanding VAT liability.
 
  • Like
Reactions: Mozz01
Upvote 0
DWS said:
Which is why you should not take advice from AI, because on this occasion it is wrong.
Yes you can apply to dissolve a Company even if it has debts, you just have to make sure you write to all the Creditors telling them your intensions which gives them the chance to object if they so wish.
HMRC do not always object if the Company owes them money, I have just had a Company dissolved with Companies House who have an outstanding VAT liability.
Click to expand...
Thank you very much.
DWS said:
Which is why you should not take advice from AI, because on this occasion it is wrong.
Yes you can apply to dissolve a Company even if it has debts, you just have to make sure you write to all the Creditors telling them your intensions which gives them the chance to object if they so wish.
HMRC do not always object if the Company owes them money, I have just had a Company dissolved with Companies House who have an outstanding VAT liability.
Click to expand...
Is there a template letter anywhere for the creditors for this situation?
 
Upvote 0
The template letter known as the Spongebob Plan is in the third post here.
www.ukbusinessforums.co.uk

The Spongebob plan !!

OK.. So I have read and re-read the many posts on closing down the company yourself. Seems simple enough and basically cost nothing too which is great BUT.. If I have read it all correctly it seems to hinge on monies being owed to those nice people at the revenue so what if the company only...
www.ukbusinessforums.co.uk www.ukbusinessforums.co.uk
 
  • Like
Reactions: Mozz01
Upvote 0
Mozz01 said:
I don’t know, I guess so yes

Should I?
Click to expand...
You should do nothing, strictly speaking.

It’s an offence not to notify creditors. If your brother sent the creditor letter to a non-creditor, that would not, as far as i can see (or imagine), be an offence. So he can’t lose by treating them as one.

Afaik they monitor CH , so there’s no hope that a criminal failure to send will keep them off the scent.
 
Upvote 0
If he is still trading, stop now. If he is in leased or rented accommodation and there are any assets van, tools, computers, leaving them in place is the right thing to do, but you could do something else! --- Either pay a licensed insolvency practitioner like https://www.liquidationpeople.co.uk/ or just wait for a creditor to instigate it. Don't put any money in, don't do anything, don't get an accountant. Especially don't panic, just stop all activity and move on and wait. Liquidation will get rid of all the debt unless foul play is discovered.
 
Upvote 0
Newchodge said:
Yes. How much are they owed? In VAT, corporation tax, PAYE and NI?
Click to expand...
I sure at this moment but I’m sitting down with him tomorrow and going to try and make a start


Paye and NI should be zero, VAT and Tax hopefully 6 months or so which I would estimate around 5k
 
Upvote 0
So I guess first steps are locking the door and sending letters to creditors to inform stopped trading?

Then wait 3 months before applying for strike off online?
 
Upvote 0
Mozz01 said:
I sure at this moment but I’m sitting down with him tomorrow and going to try and make a start


Paye and NI should be zero, VAT and Tax hopefully 6 months or so which I would estimate around 5k
Click to expand...
If he has taken money from the company since April he could now run payroll to turn (at least some of) the money taken into salary, without incurring PAYE or NI. That would reduce the danger of his having an overdrawn director's loan.
 
Upvote 0
DoolallyTap said:
If he is still trading, stop now. If he is in leased or rented accommodation and there are any assets van, tools, computers, leaving them in place is the right thing to do, but you could do something else! --- Either pay a licensed insolvency practitioner like https://www.liquidationpeople.co.uk/ or just wait for a creditor to instigate it. Don't put any money in, don't do anything, don't get an accountant. Especially don't panic, just stop all activity and move on and wait. Liquidation will get rid of all the debt unless foul play is discovered.
Click to expand...
Overdrawn Director's Loan is likely given the description above.
 
Upvote 0
Newchodge said:
If he has taken money from the company since April he could now run payroll to turn (at least some of) the money taken into salary, without incurring PAYE or NI. That would reduce the danger of his having an overdrawn director's loan.
Click to expand...
Cyndy

The directors cannot retrospectively re-write history as regards the DLA when the company is insolvent (especially with RTI).
 
Upvote 0
Lisa Thomas said:
Cyndy

The directors cannot retrospectively re-write history as regards the DLA when the company is insolvent (especially with RTI).
Click to expand...
A director can issue a salary payment to themselves in December 2025 and use it to reduce the overdrawn DLA. There is no re-writing of history. They cannot, of course, issue a salary payment in December 2025 that purports to relate to a salary payment prior to April 2025.
 
  • Like
Reactions: eteb3
Upvote 0
You must log in or register to reply here.

Similar threads

tony84
Offering client a reduced amount for quick payment
Replies
13
Views
6K
Legal, Employment and Insolvency
tony84
tony84
Ivanzyt
Duty to give tax advice
Replies
19
Views
4K
Legal, Employment and Insolvency
nelioneil
nelioneil
T
Work Injury Claim
Replies
13
Views
6K
Legal, Employment and Insolvency
The Resolver
The Resolver
P
Insolvency
Replies
5
Views
3K
Legal, Employment and Insolvency
Lisa Thomas
Lisa Thomas
A
Struggling to pay back a LTD company tax bill
Replies
8
Views
5K
Legal, Employment and Insolvency
UK Contractor Accountant
UK Contractor Accountant

Latest Articles

Top Bottom
Back