Winding up a company

[jmaskell]

I have a company that has been dormant now for a over a year since I started university.

Basically, I sold the main business of the company and at the time was advised by my accountant that I would be able to avoid a tax bill if I didn't sell my shares in the company, kept the company going and gradually took the money out of the company.

In December 2008, my accountant finally gave me the accounts for the period and I had a nasty shock of a £3000 tax bill (that he'd originally told me I wouldn't have - IIRC something about an asset sale).

I've tried to contact him for a few months to ask for advice and to explain the accounts, but he hasn't replied to a single email and I don't have any other way of contacting him.

At the moment, this is all a huge weight on my mind. I don't have any money left in the company and have just paid the tax bill. I want to get the company wound up as soon as possible and just forget about all the HMRC and Companies House paperwork.

Technically I think the company still owns some assets such as my laptop.

Could someone advise on how to wind the company up and if there's anything that can be done about the tax situation?

 

[Cat Balloo]

I haven't been trading for over 3 months, and though I owe £5k to HMRC and last years registration fee to Companies House, I have been advised by my accountant to "Strike my Company Off".

You will need to go to the Companies House web site, search for the Form 652a, you will also find supporting documentation for advice and help with filling in the form. Once signed and dated, post with a cheque made payable to Company House for £10 and the process will commence.

The basic advice that my Accountant gave me was that this was the best way to go, as even though I have a payment agreement in place with HMRC, I would incur more costs with the company still listed as trading, and could in effect end up being made bankrupt by HMRC, or after at least a year struck off by Companies House. I have been advised to buy back any assets from the company and to ensure that this is paid into the company bank account, and then to inform the bank that I am striking off the company and close the account. I will also need to inform any other creditors, which will include HMRC, though they will also be informed by Companies House once the process begins requesting whether they have any issue with the company being wound down.

As my accountant address is listed as the my companies Registered address, I have also been given Form 287 to change the registered address to my home address - I am a bit concerned about this as even though I have a limited company I don't know whether by moving the address to mine, whether or not my home would be liable? Could someone advise?

My accountant has also requested that I sign a disengagement letter.

What I am not sure of though is whether I will still need to submit Q1 VAT returns and also whether I will be liable to pay Corporation Tax this year?

I have to admit that I don't know whether I am doing the right thing and as to what risks I am incurring on myself, therefore if anyone else has gone through this process, I hope they too can help?

 

[elaine@cheapaccounting]

Have you read this:

The procedure is not an alternative to formal insolvency proceedings where these are appropriate, as creditors are likely to prevent the striking off (see questions 4 and 7). Even if the company is struck off and dissolved, creditors and others could apply for it to be restored to the register (see chapter 3).

from companies house

 

[Kevin Hall]

Technically I think the company still owns some assets such as my laptop.

If a company is dissolved (i.e. "struck off" the register of companies at Companies House), I believe any assets still owned by the company become the property of the Crown (i.e. you risk losing your laptop). So make sure your company sells it to you first.

 

[Credit Crunch Director]

I have company which has only traded £50k in a yar and has made losses of £26k. £5k to VAT man and the CIS Tax owes the company £5k.

The Creditors are all small and the company cant pay them. One being the Business Rates of £1k.

The company has not traded for about 3-4 months.

The company has no debtors.

Shall I write a letter to all telling them the situation and the company has no assets or value. That I cant afford liquidation and would assist them with winding up.

I just dont know what to do. I dont know what to put in aletter to the creditors.

The comany has traded justunder a year so acconts need to go i and a return before ?

 

[frauke]

A few months ago, a client (Ltd Co)told me that he had stopped trading, and could I bring his books up to date. When I finished I realised the company was "insolvent". The company had no assets, but still had expenses which were still being incurred.

I had a chat with a insolvency specialists, and obtained a draft letter which I passed onto the director. The letter explained that the company had ceased to trade. There was no cash in the bank or assets to pay for a voluntary liquidation. Also as the company could not pay its outstanding liabilities as it was insolvent. It then asks the creditor to place the company into compulsory liquidation. It ends with confirming that if nothing happens into the next 30 days, the director will take the steps to have the company struck-off the register. Letters were sent registered post to every creditor, and 30 days later he completed the forms and paid the fee to have to company struck off. He consulted the creditors prior to doing it, so there were no problems.

If there had been any assets then this would not have been an option, as the assets could have been used to pay for a voluntary liquidation.

 

[Credit Crunch Director]

Thanks for that advice.

Is there somewhere online to get a template of a letter to write to creditors or just write an honest letter explaing all the facts.

I assume that the accounts and returns need to be up to date.

 

[yorkshirejames]

I have company which has only traded £50k in a yar and has made losses of £26k. £5k to VAT man and the CIS Tax owes the company £5k.

The Creditors are all small and the company cant pay them. One being the Business Rates of £1k.

The company has not traded for about 3-4 months.

The company has no debtors.

Shall I write a letter to all telling them the situation and the company has no assets or value. That I cant afford liquidation and would assist them with winding up.

I just dont know what to do. I dont know what to put in aletter to the creditors.

The comany has traded justunder a year so acconts need to go i and a return before ?

I suggest you get someone on board to pursue the CIS money - I have sent you a PM.

 

[Langley_Group]

These things can be difficult and confusing. Your best bet is always to speak with a licensed professional as insolvency can be a legal and financial minefield. If you would like me to arrange for you to have a quick chat on the phone with a licensed Insolvency Practitioner send me a PM, or search me out on google.

 

[Leicslad]

Hello everyone,
I'm in the same situation, but worse (I know some people will just say its all my fault, but I'm now desparate for some help)...
I haven't had any work for 6 months now and it's just been getting worse and worse. The accountants that I use have been hopeless, they haven't done anything for me and I haven't had any contact from them in several months now.
I've received a shocking letter from the HMRC only yesterday threatening winding up due to the fact that they state I owe nearly £28,000 in tax and VAT. I've made them fully aware of the situation last year, and they told me then to keep them up to date, which I have done.
My trouble started years ago with an accountant who when I started didn't post me anything to do with my CT (Back then, I was starting up and wasn't fully sure that it was due). This happened for two consecutive years and it wasn't until I got a letter from the IR that I found out about it. Since then I've struggled to catch up with the CT over the years.
I've changed accountants since then, but my troubles still haven't stopped. Last year I found out that according to the IR I had underpayed tax in 04/05 & 05/06, which I was completely unaware of, and that the accountants were as well (which I can't believe seeing as they do the books). I was struggling at this point due to the now recession kicking in. They also now seem to found yet another load of tax which I thought I'd already paid off.
I have no debtors, apart from the obvious. But the company also doesn't have any assets bar a single computer. I want to wind everything up, but don't have any money to do so. I know I should have gotten some help sooner, but I thought back then I would have beenn able to maybe get some more work in, but it's all been to no avail now. I know there is now no easy way out of this, but now I just don't know which way to turn...

 

[Williams lester]

If the company has no assets, let HMRC force a liquidation, just tell them you cannot pay and have no prospect of ever paying the outstanding balance.

 

[Leicslad]

If the company has no assets, let HMRC force a liquidation, just tell them you cannot pay and have no prospect of ever paying the outstanding balance.

OK, I know I'd get struck off for doing this. That wouldn't bother me so much as due to the current conditions I don't think I'd ever want to start up another company for the forseeable future...
But I wouldn't really fancy doing this, what would happen to my house! Can't the HMRC force a sale on the property? Thanks to this recession it'd get sold for pittance and we've still end up owing a load. It'd probably end up getting sold in negative equity...

 

[Williams lester]

Unless you have given personal guarantees to the company creditors then your only liability would be the amount of share capital which you hold and remains unpaid (obviously if all share cap. is fully paid up there is no liability).

 

[yorkshirejames]

If the company has no assets, let HMRC force a liquidation, just tell them you cannot pay and have no prospect of ever paying the outstanding balance.

Unless I've missed it, he doesn't say whether he is a sole trader or ltd co.

Advice to all looking for help - give as much detail as you can about EXACTLY what your setup is.

 

[Williams lester]

Unless I've missed it, he doesn't say whether he is a sole trader or ltd co.

Advice to all looking for help - give as much detail as you can about EXACTLY what your setup is.

You must have missed it then as the poster says it is a company and he had problems paying CT....therefore I assumed it was a company!

 

[Deleted member 35011]

Hi folks,

Business Debtline have produced a leaflet about how to have a company struck off if there are insufficient assets to pay an insolvency practitioner. One poster above outlined the process his client went through but this leaflet gives you the full scoop.

Aaron

 

[Leicslad]

Thank you all for the information you've provided. Aaron, thanks for the link, that information was just what I was looking for. I've visited many sites, but none have managed to give me this much info.
I'll start everything off on Tuesday after the Easter break.

Thank you all again...

 

[carey bookkeeping]

Thanks Aaron for the link. A useful leaflet.

 

[justintime]

I had a chat with a insolvency specialists, and obtained a draft letter which I passed onto the director. The letter explained that the company had ceased to trade. There was no cash in the bank or assets to pay for a voluntary liquidation. Also as the company could not pay its outstanding liabilities as it was insolvent. <snip>

I am in a similar situation to your client. I took over a limited company in October last year that began trading in April 2008. It is now at the stage where it has become insolvent ( I have struggled to pay the 3 employees over the last couple of weeks and money is now extremely tiight) and there are no assets in the company other than a few bits of furniture, 2 computers and a van that the engine has just seized up on. Lucky to fetch £300 in total. Debts are around £20k including VAT/PAYE/Rates.

I know the procedure is to voluntarily wind the company up but I cant afford to pay a liquidator to do it. Can I take this route suggested to wind up the company and what do I do about the accounts? They were in a right mess (not by me)and I am currently bringing them up to date which should be completed over the next two weeks. I have done them myself up to trial balance but I cant afford to pay an accountant to submit them to IR or Companies House. Should i wait until the accounts are completed before closing the company?

I have Machinery which is rented and the brother of the person who owns them wants to move into the premised (rented) and start a similar business. I offered to sell him the ltd co but he doesn't want to take on any of the companies debts and he is happy to just be a sole proprietor.

Is he able to pick up where I left off and how are the employees affected, do they become redundant if he takes them back on? I would have no further involvement.

Any help would be appreciated.

 

[yorkshirejames]

Is he able to pick up where I left off and how are the employees affected, do they become redundant if he takes them back on? I would have no further involvement.

Any help would be appreciated.

You can make the employees redundant, or they could transfer to him under TUPE.

 

[Cat Balloo]

Hi Y'all

Just to let you know that my Ltd Company's Strike off has been accepted by Companies House, so am now in the process of sending copies of the 652a to all parties that need to be informed.
It has cost me in total, from the £10 to register the strike off plus the recorded deliveries a total of £25! Have to admit I feel really relieved that it is all over.

 

[David Griffiths]

Hi Y'all

Just to let you know that my Ltd Company's Strike off has been accepted by Companies House, so am now in the process of sending copies of the 652a to all parties that need to be informed.
It has cost me in total, from the £10 to register the strike off plus the recorded deliveries a total of £25! Have to admit I feel really relieved that it is all over.

I think that you've got things the wrong way round there - you are supposed to send the 652a to creditors before you file it at Companies House, not after it's been struck off, which is the way that I read your post. If the company has been struck off, I wouldn't send the copies of the 652 now - just a copy of the letter from Companies House. And I wouldn't sent that to everybody, just the people who contact you or chase for money in future.

 

[Cat Balloo]

Thanks Daniel

I sent out the 652a copies to HMRC, Companies House as suggested by my Accountant at the same time? Would this cause a problem? Should I not then send one to my Bank also? My 652a was originally posted to Companies Hse 10 April, when I spoke with them yesterday they said that that my companies strike off had been accepted and that they would be posting the strike off in the Gazette in 3 months. I have written to my Bank (Business Account) to close the Account and as per my earlier thread included a copy of the 652a - can you advise me as to whether I should post this tonight or not - thankfully because of the rain this afternoon I have not ventured outside?
Many thanks

 

[Cat Balloo]

Sorry David - error there with your name - have a very good friend called Daniel Griffiths - bit of a slip there - APOLOGIES

 

[David Griffiths]

Thanks Daniel

I sent out the 652a copies to HMRC, Companies House as suggested by my Accountant at the same time? Would this cause a problem? Should I not then send one to my Bank also? My 652a was originally posted to Companies Hse 10 April, when I spoke with them yesterday they said that that my companies strike off had been accepted and that they would be posting the strike off in the Gazette in 3 months. I have written to my Bank (Business Account) to close the Account and as per my earlier thread included a copy of the 652a - can you advise me as to whether I should post this tonight or not - thankfully because of the rain this afternoon I have not ventured outside?
Many thanks

No problem. I've been called a lot worse than Daniel!

The forms should be sent to notifiable parties within 7 days of making the application to Companies House. As I said, I read your post as meaning that the company had been struck off, but now see that Companies House are now starting the process, so in that case I think that you can send them now.

The guidance attached to the Companies House form says

"Copies of this application must be sent to all notifiable parties i.e. creditors, employees, shareholders, pension managers or trustees and other directors of the company within 7 days from the day on which the application is made.
Copies must also be sent to anyone who later becomes a notifiable party within 7 days of becoming so. You should check the guidance notes which contain a full list of those who must be notified. Failure to notify interested parties is an offence. It is advisable to obtain and retain some proof of delivery or posting of copies to notifiable parties."

As the notice hasn't appeared in the Gazette yet, I don't think that anybody would get upset if you send the forms now.

 

[Cat Balloo]

Many thanks David.

Can drop off the letter to the bank by hand tomorrow - luckily it is local

As you said as nothing has been posted in the Gazette, I should be ok?

 

[Credit Crunch Director]

How often is someone disqualified as a director. AS I was a director of a company and I am being investigated.

I have lost everything and I am worried but dont know why.

There is nothing to find and I am beyond caring.

Just trying to start again 2 years later with a small company and dont want to be disqualified. I am already doing an IVA to pay personal guarantees and if I was disqualified I could not continue the IVA.

 

[yorkshirejames]

How often is someone disqualified as a director. AS I was a director of a company and I am being investigated.

I have lost everything and I am worried but dont know why.

There is nothing to find and I am beyond caring.

Just trying to start again 2 years later with a small company and dont want to be disqualified. I am already doing an IVA to pay personal guarantees and if I was disqualified I could not continue the IVA.

I wouldn't worry. Materiality often rules in these situations. If there is nothing to find then you've nothing to worry about. Keep copies of any documents etc that may help you.

 

[Leicslad]

Hi sorry to bring all this up again but...

I've now been served the high court papers and the hearing date is 21st Oct. Do I have to attend this? I must admit I am getting very worried regarding this as the papers state that I owe just under £24k made up of NIC class1, NIC interest, PAYE, PAYE interest, Self ass, Self ass interest and VAT... So basically everything you can be taxed on...

I have written letters to IR but it seems as though they just ignored the letters and passed my case onto other departments in other areas, as I still continued to get letters from them since I wrote to them the first time.

Can anyone give me any more info on what is likely to happen???

Thanks...

 

[elaine@cheapaccounting]

Hi sorry to bring all this up again but...

I've now been served the high court papers and the hearing date is 21st Oct. Do I have to attend this? I must admit I am getting very worried regarding this as the papers state that I owe just under £24k made up of NIC class1, NIC interest, PAYE, PAYE interest, Self ass, Self ass interest and VAT... So basically everything you can be taxed on...

I have written letters to IR but it seems as though they just ignored the letters and passed my case onto other departments in other areas, as I still continued to get letters from them since I wrote to them the first time.

Can anyone give me any more info on what is likely to happen???

Thanks...

Blimey - I would suggest getting professional advice on this asap

There is not enough info in your post to comment on your specifics and a forum is not the place to give advice on a pending court matter.

You need specific advice related to your specific details.

 

[Leicslad]

Blimey - I would suggest getting professional advice on this asap

There is not enough info in your post to comment on your specifics and a forum is not the place to give advice on a pending court matter.

You need specific advice related to your specific details.

I would have gotten some sort of advice on this, except I don't have any money!!!
I tried to get companies house to strike off the company earlier this year (please see start of thread). Companies house ignored it at first, then I eventually got a letter from them stating that someone had objected to the striking off (the IR). The high court letters that I have received are the papers for the winding up petition...
However, I have been unemployed since this time last year and haven't been able to find any work, hence the reason why the I tried to get the company struck off...
I would appreciate any information that can be given on this at the moment... I don't care that it's on a forum, as, like I have said I don't have any money to get any professional advice regarding this...

 

[elaine@cheapaccounting]

How about ringing these people:

http://www.taxaid.org.uk/

 

[Leicslad]

How about ringing these people:

taxaid.org.uk

Thank you for your reply...

However, it looks like this is more geared towards individuals rather than Ltd company's... I will try and ring them tomorrow thoughto see if there is anything they can do...

 

[yorkshirejames]

Hi sorry to bring all this up again but...

I've now been served the high court papers and the hearing date is 21st Oct. Do I have to attend this? I must admit I am getting very worried regarding this as the papers state that I owe just under £24k made up of NIC class1, NIC interest, PAYE, PAYE interest, Self ass, Self ass interest and VAT... So basically everything you can be taxed on...

Okay - is this you personally, or the company? From the rest of your post, I would imagine it is your Ltd Company....

I've PM'd you my details, as it is possible my company can assist you. Feel free to call me.

 

[jim_price]

I imagine that in the absence of anyone contesting the winding up petition, the court will appoint the Official Receiver to investigate the circumstances leading up to the insolvency, and whether there are any assets to liquidate which sounds unlikely. The OR will also examine the conduct of the director(s).

When you mention Self Assessment, I am assuming you are talking about Corporation Tax Self Assessment.

 

[Leicslad]

Everything is to do with the Ltd company...

Thank you for the offer James, but unfortunately I don't have any spare money at all... As I have said, I don't really have any spare money at all. Otherwise I would have tried to appoint an IP.

I was just providing computer services and the company doesn't have any real assets at all, apart from a computer, which is now nearly 3yrs old. The first I was told of any of the money due to the IR was last August. The amounts were from two previous years ago now and they took until then to contact me regarding the amounts... It was just dropped on me!
There is obviously last years CT as well as I haven't been able to pay any of that due to no work...
I contacted them regarding this to try and sort some sort of payment arrangement out, but by the time any sort of decent communication was made by then, I was unable to gain any work, the crash we had last year, made most of my market disappear within a month...
I guess I have no choice but to attend the court hearing...

 

[yorkshirejames]

Everything is to do with the Ltd company...

Thank you for the offer James, but unfortunately I don't have any spare money at all... As I have said, I don't really have any spare money at all. Otherwise I would have tried to appoint an IP.

I was just providing computer services and the company doesn't have any real assets at all, apart from a computer, which is now nearly 3yrs old. The first I was told of any of the money due to the IR was last August. The amounts were from two previous years ago now and they took until then to contact me regarding the amounts... It was just dropped on me!
There is obviously last years CT as well as I haven't been able to pay any of that due to no work...
I contacted them regarding this to try and sort some sort of payment arrangement out, but by the time any sort of decent communication was made by then, I was unable to gain any work, the crash we had last year, made most of my market disappear within a month...
I guess I have no choice but to attend the court hearing...

Give me a call for a quick chat - initial advice is always free - you only pay for the cost of a phone call.

 

[willitbe]

Everything is to do with the Ltd company...

Thank you for the offer James, but unfortunately I don't have any spare money at all... As I have said, I don't really have any spare money at all. Otherwise I would have tried to appoint an IP.

I was just providing computer services and the company doesn't have any real assets at all, apart from a computer, which is now nearly 3yrs old. The first I was told of any of the money due to the IR was last August. The amounts were from two previous years ago now and they took until then to contact me regarding the amounts... It was just dropped on me!
There is obviously last years CT as well as I haven't been able to pay any of that due to no work...
I contacted them regarding this to try and sort some sort of payment arrangement out, but by the time any sort of decent communication was made by then, I was unable to gain any work, the crash we had last year, made most of my market disappear within a month...
I guess I have no choice but to attend the court hearing...

To be honest, this doesn't sound like the recession killed your business, your first post suggests problems going back a few years.

Businesses are still using computers, very probably more so now than they were, companies becoming more efficient in times of hardship etc.

This sounds like you were playing "Charlie Large Potatoes" when the sun was shining and now it's raining you are crying "Foul" and blaming everyone but yourself!.

I can see it now, 3 years ago, the BMW , over extended mortgage on the 5 bed gaff, latest email phone and lots of braying into it at every available opportunity, the holidays, lots of paying others to do what you should and could have done yourself, lots of time spent looking at a buying a second property(instead of earning).

Sounds like you are going to have to take this like a man, expect the OR to have a look at your expenditure and expect the OR to start asking a lot of awkward questions!!

And you say you are now unemployed?...I bet you are!...

 

[Spongebob]

Hi sorry to bring all this up again but...

I've now been served the high court papers and the hearing date is 21st Oct. Do I have to attend this? I must admit I am getting very worried regarding this as the papers state that I owe just under £24k made up of NIC class1, NIC interest, PAYE, PAYE interest, Self ass, Self ass interest and VAT... So basically everything you can be taxed on...

I have written letters to IR but it seems as though they just ignored the letters and passed my case onto other departments in other areas, as I still continued to get letters from them since I wrote to them the first time.

Can anyone give me any more info on what is likely to happen???

Thanks...

Sorry I've not seen your posts before now, but I think I can help.

Your company has been served with a winding up petition by HMRC. In your circumstances this is the best possible thing that could happen!

No, you do not need to attend the high court. In fact, you do absolutely nothing. Don't write or call - there is no point. HMRC issues these petitions in the hope that companies who are late with payments will suddenly conjure up the funds when the alternative is liquidation. I'm sure a lot do just that.

You however, want the company liquidated! So play along with the system and it will work in your favour.


Following the court date you will receive notification that the company has been wound up. Some time after that you will receive correspondence from your local Official Receivers office notifying you that the company is in liquidation and calling you in to an interview to investigate the company's failure.

Do not worry about this. Simply go along and explain why things didn't work out. Answer questions truthfully and don't be a smartarse. The interviewer is a civil servent with boxes to tick. Make their life easy and you will leave after a couple of hours and never hear another thing.

Best of all it is completely free!

You have no personal liability for the tax owed to HMRC. The debt disappears along with the company. You are completely in the clear.

Good luck and don't worry. It's a breeze!

 

[Spongebob]

To be honest, this doesn't sound like the recession killed your business, your first post suggests problems going back a few years.

Businesses are still using computers, very probably more so now than they were, companies becoming more efficient in times of hardship etc.

This sounds like you were playing "Charlie Large Potatoes" when the sun was shining and now it's raining you are crying "Foul" and blaming everyone but yourself!.

I can see it now, 3 years ago, the BMW , over extended mortgage on the 5 bed gaff, latest email phone and lots of braying into it at every available opportunity, the holidays, lots of paying others to do what you should and could have done yourself, lots of time spent looking at a buying a second property(instead of earning).

Sounds like you are going to have to take this like a man, expect the OR to have a look at your expenditure and expect the OR to start asking a lot of awkward questions!!

And you say you are now unemployed?...I bet you are!...

My God, but that is an unhelpful, judgmental and ignorant post!

The guy is on his uppers, begging for help, and some holier-than-thou asshole has to stick the knife in.

The whole point of limited liability is to encourage enterprise and risk-taking. Without it no entrepreneur would ever take the chance of starting a business. This has been part of public policy for hundreds of years and every country in the world has adopted similar principles.

Most companies fail. Most successful business people have at least one business failure in their CV - many have far more! It is only in this way that people learn.

Nowhere in his posts does Leicslad suggest that he ran his company in a fraudulant or irresponsible manner. All he appears to be guilty of is a little nievety in his dealings with his accountant and HMRC. There but for the grace of God go us all.

Ignore the dickhead, mate!

Bob