Please help with closing my business

[Bailey9991]

Good afternoon, I am really hoping someone here can give me some advice as I am worried sick about what to do.

So I have an online shop which I opened in 2016, it has made a loss each year and I have now decided to close it as my husband has become seriously unwell and I can no longer continue. I have managed to keep on top of the tax returns and submissions to Companies House but am now at a loss as to how to successfully close it.

My year end is 30th September but I have not traded for at least 4 months and want to apply for strike off. I know that I will not have to submit a further set of accounts to Companies House but will have to do a final tax return, which I cannot do yet as my accounting year has not ended.

There is no money whatsoever in the bank but I hold around £8000 in unsold stock, here is where I am confused, do I just leave the stock figure under stock? what will happen then, will it technically become bona vacantia? do I reduce the stock figure to zero and increase drawings by the same figure? if I do this do I use the cost price (the stock is no longer worth what I paid for it) or even worse do I have to use it's rrp which would mean I am taking more from the business than it is worth.

If I later sell the stock bit by bit, will I have to declare the money from this on self-assessment even if I am selling it at a loss?

 

[UK Contractor Accountant]

here is no money whatsoever in the bank but I hold around £8000 in unsold stock,

the company will need to sell the stock to the Director/shareholders at its estimated realisable value as a discounted global stock sale.

You will need to pay for the stock or take as a dividend distribution in specie unless you have loan money invested in the company which you can use to offset.

 

[Mr D]

Good afternoon, I am really hoping someone here can give me some advice as I am worried sick about what to do.

So I have an online shop which I opened in 2016, it has made a loss each year and I have now decided to close it as my husband has become seriously unwell and I can no longer continue. I have managed to keep on top of the tax returns and submissions to Companies House but am now at a loss as to how to successfully close it.

My year end is 30th September but I have not traded for at least 4 months and want to apply for strike off. I know that I will not have to submit a further set of accounts to Companies House but will have to do a final tax return, which I cannot do yet as my accounting year has not ended.

There is no money whatsoever in the bank but I hold around £8000 in unsold stock, here is where I am confused, do I just leave the stock figure under stock? what will happen then, will it technically become bona vacantia? do I reduce the stock figure to zero and increase drawings by the same figure? if I do this do I use the cost price (the stock is no longer worth what I paid for it) or even worse do I have to use it's rrp which would mean I am taking more from the business than it is worth.

If I later sell the stock bit by bit, will I have to declare the money from this on self-assessment even if I am selling it at a loss?

If you pay for the stock personally then sell for a profit then your profit may be subject to tax.
No reason you should normally sell at a loss. You won't be buying from the company for more than the company paid?

 

[Bailey9991]

what do you mean by loan money? I have currently £15000 invested in the business and the capital and reserves figure is currently only £8450 which is made up of the stock plus some tangible assets.

I have made a loss each year so the company owes me at least the £8,000 (value of current stock) doesnt it?

I expect realisable value to be much less than this though if I sell it as a bulk lot, perhaps £2,000

 

[Bailey9991]

The items are cheap party items, some of it will never sell and the rest will have to be priced so cheaply to shift I will be making a loss. Due to my husband being ill I just need rid of it asap even if for a loss.

 

[Mr D]

what do you mean by loan money? I have currently £15000 invested in the business and the capital and reserves figure is currently only £8450 which is made up of the stock plus some tangible assets.

I have made a loss each year so the company owes me at least the £8,000 (value of current stock) doesnt it?

I expect realisable value to be much less than this though if I sell it as a bulk lot, perhaps £2,000

The company made a loss each year. Not you.

The losses it made as a legal entity don't impact on your income or your debt.

 

[Chris Ashdown]

The value of the stock, depending naturally on how popular it is, can be as little as 10 to 20 pence in the pound if sold at auction, if say a IP or bailiff was to sell of the stuff , that would probably be what they would expect unless something special

 

[Lisa Thomas]

I am sorry to hear your husband is ill.

You could sell the stock and potentially use the funds to Liquidate, either voluntarily or through Court. It will cost from £3-5k to Lqe. The Liquidator's agents can help sell the stock if you don't want to deal with it yourself.

You should take insolvency advice.

 

[Bailey9991]

Hi lisa, but the company is not insolvent, it has no debt at all. Surely I can just apply to have it struck off for £10, why would I pay out £3-5k?

Any way I have decided the easiest thing to do is sell as a bulk lot, it will make a loss but at least it will be over and done with. I will wait 3 months from the sale then apply to be struck off.

 

[BeanCounter101]

what do you mean by loan money? I have currently £15000 invested in the business and the capital and reserves figure is currently only £8450 which is made up of the stock plus some tangible assets.

I have made a loss each year so the company owes me at least the £8,000 (value of current stock) doesnt it?

I expect realisable value to be much less than this though if I sell it as a bulk lot, perhaps £2,000

As UKCA says, if the company owes you the £15K you've invested you can offset the sale of the stock from the company to yourself against that.

If you don't write down the value of the stock in the company to the realisable value and "buy" it (ie offset against your £15K) at cost (£8K), then you'll personally have £8K of stock which you might sell for £2K. That would give you £6K of trading losses for your personal tax return which you might be able to use in the future...

 

[Lisa Thomas]

Hi lisa, but the company is not insolvent, it has no debt at all. Surely I can just apply to have it struck off for £10, why would I pay out £3-5k?

Any way I have decided the easiest thing to do is sell as a bulk lot, it will make a loss but at least it will be over and done with. I will wait 3 months from the sale then apply to be struck off.

Apologies I misread your original post. The Company is technically insolvent as it owes you £15k but I agree no point in Liquidating it in the circumstances.

Dissolution seems appropriate. Does the Company have any accountants as they should be able to help you with this.