Looking to make Ltd insolvent and withdraw final balance

Discussion in 'Insolvency' started by Jaybeee, Apr 12, 2020.

  1. Jaybeee

    Jaybeee UKBF Newcomer Free Member

    1 0
    Hi all, firstly I hope you're all staying safe and home.

    I am a small one-man IT consultancy, and due to lack of work I am looking to make the company insolvent. I created the company in May, and I've since barely turned over 18k, and after expenses/small salary/dividends I have about a couple of grand left I had calculated as the company's CT liability. However I could very much use that cash about now, as my personal savings are gone. I'm hoping in light of this crisis HMRC would make an allowance for struggling small businesses, and not come looking for the Directors and making us personally liable. I should add that I ran another company from 2014-2016, and had that declared insolvent, although I paid the CT.

    Could you guys advise what (if any) the most tax-efficient method to access that cash would be?

    TIA
     
    Posted: Apr 12, 2020 By: Jaybeee Member since: Apr 12, 2020
    #1
  2. obscure

    obscure UKBF Ace Free Member

    3,241 815
    Crisis or not I very much doubt that HMRC will turn a blind eye to tax evasion. Especially when done to financially benefit the Director(s).

    If you want to minimise your tax obligation you will need to take to your accountant to see if there are any options available to the business.
     
    Posted: Apr 13, 2020 By: obscure Member since: Jan 18, 2008
    #2
  3. Porky

    Porky UKBF Regular Full Member

    166 64
    Hi Jay,

    Official Answer - Be a good boy, see your accountant, do not make company insolvent as you are in breach of directors obligations, close company properly and pay the tax due, anything less is tax avoidance

    Unofficial Answer - cease trading, use the cash to survive and close the account and don’t bother to file anything, in time company will be struck off anyhow. You could request it struck off and see if any objections. With such little trading revenue are HMRC really going to be that bothered in this climate?

    Good luck whatever call you make
     
    Posted: Apr 13, 2020 By: Porky Member since: Dec 27, 2019
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    22,067 2,593
    If HMRC ever investigate then the fact you stole money from the company that should have been used to pay company debts wouldn't go down well. You can lose the liability shield of the company and be personally liable.

    If they investigate.

    Don't recall hearing of any government allowance for struggling small businesses in that way, HMRC not keen on making decisions contrary to government policy.
     
    Posted: Apr 13, 2020 By: Mr D Member since: Feb 12, 2017
    #4
  5. kulture

    kulture UKBF Legend Staff Member

    8,089 2,229
    Is it stealing? Surely companies can pay salaries. In addition can you not furlough yourself and claim the 80% and then use this 80% to pay off the CT when you get the grant.
     
    Posted: Apr 13, 2020 By: kulture Member since: Aug 11, 2007
    #5
  6. NicoJ

    NicoJ UKBF Regular Free Member

    230 44
    Are you not being a little premature? Will you have any further work later in the year?

    You say your account was created in May which should mean a year end of May 2020. This gives you until February 2021 to pay the corporation tax. Why are you looking to close the company so soon for a liability that's not even due yet?
     
    Posted: Apr 13, 2020 By: NicoJ Member since: Mar 27, 2017
    #6
  7. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,486 436
    smh
     
    Posted: Apr 14, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #7