Keeping a LTD Company Open

[commadus]

Really not sure how to proceed.

Currently have a LTD Company that is VAT registered. It is not trading - there are no sales just costs.

It has a BBL Loan of £4k which I am hoping to pay off in the next few months, after that there are no running costs apart from annual return and doing quarterly VAT returns of Zero.

My point is that sometime in the future I would like to go contracting - so should I keep the LTD company open or shut it down and when I actually go contracting to create a new business. In the near future is perhaps 12 months onwards.

My point is - is there any value to keeping the LTD company registered when you go for a contract because it shows you have some past record rather than a newly created company?

 

[Frank Wessely]

Hi @commadus

Based on your narrative I think that there is some value in either ensuring a tidy closure and dissolution of the company or keeping it alive but dormant until you start contracting, for the reasons you state. In each scenario you will have to pay off the Bounce Back loan even though there is no personal liability to do so. The alternative is to have the company liquidated, which will cost roughly a similar amount to the BBL. But doing that will mean an investigation of your conduct as director and a permanent record of the insolvency. Ideally avoided.

Hope that helps.

 

[Elliot Green]

Really not sure how to proceed.

Currently have a LTD Company that is VAT registered. It is not trading - there are no sales just costs.

It has a BBL Loan of £4k which I am hoping to pay off in the next few months, after that there are no running costs apart from annual return and doing quarterly VAT returns of Zero.

My point is that sometime in the future I would like to go contracting - so should I keep the LTD company open or shut it down and when I actually go contracting to create a new business. In the near future is perhaps 12 months onwards.

My point is - is there any value to keeping the LTD company registered when you go for a contract because it shows you have some past record rather than a newly created company?

It perhaps depends on who is looking and their sophistication. It appears you will have a dormant company that someone who understands accounts may (depending on timescales) see a balance sheet that discloses no trading in recent times. It might be artificial to keep it open for appearance purposes but if you can do the administration and compliance yourself then the costs are low.

If alternatively you strike off the company once the BBL is paid and later set up another one, you will still have the old company in your name to refer.

However the costs of opening companies in the future may rise and be a slower process, so you may find it fruitful to hang on to this corporate structure rather than disposing of it.

 

[WaveJumper]

It would appear the costs for opening or even having a dormant company (£34 a pop for confirmation statements) could kick in later this year - referring to a previous thread on the topic

 

[commadus]

Hi @commadus

Based on your narrative I think that there is some value in either ensuring a tidy closure and dissolution of the company or keeping it alive but dormant until you start contracting, for the reasons you state. In each scenario you will have to pay off the Bounce Back loan even though there is no personal liability to do so. The alternative is to have the company liquidated, which will cost roughly a similar amount to the BBL. But doing that will mean an investigation of your conduct as director and a permanent record of the insolvency. Ideally avoided.

Hope that helps.

Thank you - as to the dormant company - would I then also de register for VAT?

In 2025 onwards would contracting still be better via a LTD company or through an Umbrella company.

 

[commadus]

It perhaps depends on who is looking and their sophistication. It appears you will have a dormant company that someone who understands accounts may (depending on timescales) see a balance sheet that discloses no trading in recent times. It might be artificial to keep it open for appearance purposes but if you can do the administration and compliance yourself then the costs are low.

If alternatively you strike off the company once the BBL is paid and later set up another one, you will still have the old company in your name to refer.

However the costs of opening companies in the future may rise and be a slower process, so you may find it fruitful to hang on to this corporate structure rather than disposing of it.

So if a company becomes dormant does it need to provide annual accounts?

 

[MyAccountantOnline]

Thank you - as to the dormant company - would I then also de register for VAT?

In 2025 onwards would contracting still be better via a LTD company or through an Umbrella company.

If the company is dormant you should have already cancelled teh VAT registration. Have a read here

Register for VAT

How to register for VAT, change your details, cancel your registration, register for VAT in EU countries.

www.gov.uk

 

[MyAccountantOnline]

Really not sure how to proceed.

Currently have a LTD Company that is VAT registered. It is not trading - there are no sales just costs.

It has a BBL Loan of £4k which I am hoping to pay off in the next few months, after that there are no running costs apart from annual return and doing quarterly VAT returns of Zero.

My point is that sometime in the future I would like to go contracting - so should I keep the LTD company open or shut it down and when I actually go contracting to create a new business. In the near future is perhaps 12 months onwards.

My point is - is there any value to keeping the LTD company registered when you go for a contract because it shows you have some past record rather than a newly created company?

Don't forget annual accounts are also required for a dormant company (and bear in mind HMRC and Companies House have a different definition of dormant)

If the BBL will be paid off I'd close the company once that's done if you can use the striking-off procedure.

 

[UK Contractor Accountant]

In 2025 onwards would contracting still be better via a LTD company or through an Umbrella company.

ltd - umbrella's are expensive and some use tax schemes which are deemed dubious to say the least!

 

[commadus]

ltd - umbrella's are expensive and some use tax schemes which are deemed dubious to say the least!

Would it make a difference if I used a new LTD company or my existing one.

 

[UK Contractor Accountant]

Would it make a difference if I used a new LTD company or my existing one.

Only in the sense that you have a ready made company set to go rather than having the rigmarole of setting up from scratch.

I would also keep the vat number and bank account open as I am seeing lengthy timescales in getting these set up.