Insolvent company- how to wind up?

[PPaul]

A limited company which is in its second year of trading is running into severe cash flow difficulties. The first year it made a loss and the current year has not improved. Client cannot go down the route of formally appointing a liquidator to liquidate the company as there are no funds. They might not be able to complete the accounts of the companies for the second year as well, due to cash flow difficulty.

The sole director/shareholder’s current account is not overdrawn but there is a small PAYE liability to pay. The first year’s accounts have been submitted but there is no CT liability. In this scenario, if the client was to cease trading through this company and restart afresh by forming a new company or as a sole-trader, what consequences will it have on him personally? Will HMRC purse the director with any estimated amount of corporation tax? Will HMRC wind down the company if CT600 is not submitted? In case there are Vat/PAYE liabilities outstanding, will the directors be prosecuted? Will they be blacklisted and barred from forming any limited companies in the future?

How does the process work? Any information will be greatly appreciated.