Winding up a limited company

[John Martin]

I have a limited company which I am considering dissolving but I’m not sure what is the best way to proceed, or even if it’s worth dissolving.

Basically I have no use for it any more so I thought I might as well close it, however I didn’t realise how complicated it is.

The company only has one director (myself) and no employees. There are debts in the form of director’s loans I’ve made to the company, but there are no other creditors.

The company has some intangible assets which I loaned to the company when I started it. The value of these intangible assets at current market value is now quite a lot more than when I loaned them to the company.

From a cash point of view, the company is insolvent. However, when you factor in the intangible assets, the company is quite a lot in credit.

From what I understand the easiest way to dissolve a company is with a DS01 form, but you can only do this if the company is solvent. However, the crown takes any assets.

Therefore, my plan was to formally transfer the intangible assets back to myself. This covers the director’s loans and leaves the company with zero debts and zero assets. Then I was going to fill in a DS01 and apply to dissolve the company.

Is this a good idea or am I missing something?

(I’m not sure if this would be a problem but I hadn’t realised the increased value of the intangible assets until yesterday, so on my last tax return it shows an overall debt. If they only look the last tax return it will show the company is insolvent and so a DS01 would be out of the question. Although I could submit a final set of accounts and then if it's possible fill in a DS01).

Another option might be to just make it dormant in case I decide to use the limited company at some point in the future.

Any advice appreciated.

 

[Lee Green]

A strike off is not intended for insolvent companies. However, you mention that the only creditor is you as the director. In your circumstance I would say you can go ahead and do a strike off.

But, I caveat that with the following observation:

You need to establish whether the sale of assets (which have now risen in value) won't give rise to a tax liability.

 

[Lisa Thomas]

Agreed. Dissolution sounds like the best way to go, assuming no other creditors/liabilities.

 

[artifin23]

You can only use a DS01 if the company's got money. Moving those intangible assets back to you might do the trick, but get all the paperwork straight, and think about the tax you might owe on that extra value. Honestly, putting in the final accounts that show exactly where things stand before you apply for a DS01 is usually the smartest move.

 

[MikeJ]

How are the assets accounted for? If you "loaned" them, then they should never have been on the books as an asset and are therefore irrelevant.

 

[Lee Green]

How are the assets accounted for? If you "loaned" them, then they should never have been on the books as an asset and are therefore irrelevant.

I had also noticed use of the word loan and was going to make a point about it. But, i think it was clear he had in fact sold them to the company and hence the director loan balance.

 

[John Martin]

Perhaps loan is the wrong word and I didn't sell them to the company, I transferred them. So to all intents and purposes they belonged to the company and some of them were used by the company.

As for tax liability I'll speak to my accountant. It's somewhat tricky because the assets are basically credits that I can use for a service which is linked to a web portal account. I can't transfer only some of the assets because the assets are not transferable to another account. It's just one account, so it's either all or nothing.

 

[Lisa Thomas]

If the company already has an accountant, they should be able to help dissolve the company.

 

[John Martin]

Thank you all for your advice.

I'm in discussions with my accountant to see if there are any tax liabilities. If there aren't, it should be fairly straight forward. If there are, then it's going to be complicated.