Ltd company to Sole trader help please

[57U]

Evening folks,

I'm currently the sole director of a Ltd co. The profits are very low, below £15k down from 30k when the ltd co was setup.

I would like to go back to being a sole trader.

How easy or difficult is this and what do I need to take into when closing down the ltd co ?

Thanks in advance

Dave

 

[Scalloway]

It depends how much the limited company has in the way of assets. If the total is less than £25,000 then you can use this procedure.

You should file a final set of accounts with Companies House and a CT600 with HMRC. Close the bank account - this must be done first otherwise you will lose it, then apply to Companies House for strike off.

If the value of assets is more that £25,000 you should appoint a liquidator to ensure that the winding up is done in the most efficient way. More information here.

https://www.begbies-traynorgroup.com/articles/tax/esc-c16-what-is-it-and-what-does-it-mean

 

[UK Contractor Accountant]

You would use Disicorporation Relief if transferring the assets & trade to the shareholder(s) as a going concern rather than winding up procedure.

 

[MyAccountantOnline]

Evening folks,

I'm currently the sole director of a Ltd co. The profits are very low, below £15k down from 30k when the ltd co was setup.

I would like to go back to being a sole trader.

How easy or difficult is this and what do I need to take into when closing down the ltd co ?

Thanks in advance

Dave

As always its easy if you know how and it depends on many factors.

If you are using an accountant I really do highly recommend you get help from them.

 

[MyAccountantOnline]

You would use Disicorporation Relief if transferring the assets & trade to the shareholder(s) as a going concern rather than winding up procedure.

Disincorporation relief ended on 31 March 2018

 

[UK Contractor Accountant]

Disincorporation relief ended on 31 March 2018

thanks - can see that now. The end date is buried in the guidance on the Gov.uk site!

 

[Lisa Thomas]

Don't forget you will be solely responsible for any debts as a sole trader - there will be no protection if the business becomes insolvent.

 

[SteveHa]

And don't try to claim entrepreneurs relief. You will be disqualified from claiming by continuing the work as a sole trader.

 

[57U]

It depends how much the limited company has in the way of assets. If the total is less than £25,000 then you can use this procedure.

You should file a final set of accounts with Companies House and a CT600 with HMRC. Close the bank account - this must be done first otherwise you will lose it, then apply to Companies House for strike off.

If the value of assets is more that £25,000 you should appoint a liquidator to ensure that the winding up is done in the most efficient way. More information here.

Hi, thanks for the response, can you clarify what you mean by

Close the bank account - this must be done first otherwise you will lose it,

Is this before any of the other steps you have listed ?

Also, Assets are below £25k.

 

[57U]

Don't forget you will be solely responsible for any debts as a sole trader - there will be no protection if the business becomes insolvent.

Thank you.

I realise the implications of going back to a Sole trader status, well mostly anyways, I'm looking at it from a regulatory and tax efficient angle,

I.E less paperwork for a 1 man enterprise and I think I'm well below the profit required to benefit from the tax efficiency of a Ltd co.

Isn't it said that profits etc below £30k are better off in the sole trader bracket ?


Hope that makes sense.

Thank you

 

[Scalloway]

Close the bank account - this must be done first otherwise you will lose it,

Is this before any of the other steps you have listed ?

It should be done before you file the DS01. If the account is still open when the dissolution takes place the bank will freeze it and any funds will be passed to the Crown.

 

[57U]

It should be done before you file the DS01. If the account is still open when the dissolution takes place the bank will freeze it and any funds will be passed to the Crown.

Great thank you.