One-man director/shareholder limited company

[DonkeyAccountant]

Mr C set up a limited company in July 2011 and started trading at the same time. The company traded for 5 months and ceased trading at the end of November 2011. During the 5-month period, the company earned £10,000. The amount of the business expenses is negligible.

Mr C is the only director/shareholder of the company. He is going to strike off the company this month.

He has had no other income during the tax year 2011-12 and he will not have any other income for the near future.

If he decides to dissolve the company, is it possible for the company to avoid paying corporation tax on £10,000 and at the same time Mr C does not need to pay a penny of income tax and national insurance? Even if you take out a director's salary of the nominal amount, taking advantage of his personal allowance and national insurance threshold, I still can't see how Mr C can avoid paying any tax at all (in the form of corporation tax or income tax).

Assuming Mr C is doing all the documents in a proper way (i.e. he does not intend to evade tax illegally), can he avoid any tax liabilities at all if he strikes off his company which traded for 5 months and had a profit of £10,000 during the 5-month period?

Am I missing something here?

[Incredulum]

No.

Before he strikes the company off, it will require HMRC's approval. This will require submission of the company tax return.

If he has distributed all the reserves so has no cash to pay the tax, then he will have declared an illegal dividend (having failed to accrue for the tax in the accounts) and HMRC will make him repay his dividend.


Defrauding HMRC isn't a very clever way to live, DonkeyAccountant...