Closing my business

[frensham]

Hi all

I'd like to get an idea of what happens with regard to tax and finance if I decide to shutdown my Ltd business. We have been trading for 24 years and each year made profits and paid the CT with our 9 employees being paid via paye. We have three shareholders holding slightly different shareholdings.

We owe nothing, we have cash in the bank. Our ct tax, national insurance payments are all up to date.

As directors we take a sAlary just like the employees and if we take a dividend, we pay the tax via personal SA.

So my question is assuming I pay up my suppliers and settle all outstanding debts and get money's from my clients, what is the procedure to shutdown.

In addition what happens to the companies cash funds with regard to distrribution and tax payment.
How does it actually work if for example we had 900k reserves?

Thanks in advance.

T

FYI, me and my wife and my brother own the shares, we all have an annual salary of 40k.

[j127430]

T

There are all sorts of tax issues here.

Without seeing a copy of the company accounts, it's difficult to advise but you could liquidate the company and potentially distribute the reserves to the shareholders as a capital distribution which is generally a cheaper (in terms of the tax due) option than taking an income distribution (dividend).

Whether the liquidation is done formally through an insolvency practicioner or by simply by applying to HMRC to strike off the company would need to be determined. If, by applying to HMRC, they agree under ESC C16 that you can strike off the company, then you may be able to distribute funds as capital also, although there is draft legislation in place which will restrict the reserves which can be distributed.

The distribution may even be taxed at 10%, depending upon shareholdings, if all shareholders work for the company etc.

There are also rules to avoid "phoenixism", i.e. closing down to take the cash as capital and then restarting in the near future.

You really need to speak to your accountant who will have a lot more information on your company that I have. Alternatively, send me a private message.

Lee

[Generix]

T

There are all sorts of tax issues here.

Without seeing a copy of the company accounts, it's difficult to advise but you could liquidate the company and potentially distribute the reserves to the shareholders as a capital distribution which is generally a cheaper (in terms of the tax due) option than taking an income distribution (dividend).

Whether the liquidation is done formally through an insolvency practicioner or by simply by applying to HMRC to strike off the company would need to be determined. If, by applying to HMRC, they agree under ESC C16 that you can strike off the company, then you may be able to distribute funds as capital also, although there is draft legislation in place which will restrict the reserves which can be distributed.

The distribution may even be taxed at 10%, depending upon shareholdings, if all shareholders work for the company etc.

There are also rules to avoid "phoenixism", i.e. closing down to take the cash as capital and then restarting in the near future.

You really need to speak to your accountant who will have a lot more information on your company that I have. Alternatively, send me a private message.

Lee

If you are VAT registered and have stock/assets then don't forget that there may be something to repay the VAT man.

[Tax Champion]

And your employees will be entitled to Redundancy Pay