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Where Taxpayers and Advisers Meet

Are there any consequences for liquidation?

grasshopper22
Posts:1
Joined:Wed May 03, 2023 6:36 pm
Are there any consequences for liquidation?

Postby grasshopper22 » Wed May 03, 2023 6:45 pm

Hi,

I've been working as a contractor for the last decade under a limited company that I've created. I'm the director and sole employee of this company and this company has no assets or loans or any debt of any sort.

Recently I found out through my accountant that there was corporation tax due, but due to difficulties in my business, no money has been coming in for the past 6 months. There is no money in my business account and a sum of around £20k is due to the HMRC.

My accountant suggested I liquidate this company, but I just wanted to know if there are any consequences for doing so? I understand the business is a separate legal entity from myself, so I personally cannot be chased for the tax. I've also been advised that I can either pay to have this business liquidated by a licensed facilitator or can alert the HMRC that I'm going for compulsory liquidation due to being unable to sustain the business any more. Have I understood this correctly?

I was then intending on opening a new business and new business account (under a completely different company name) and try to start from scratch again. I just wanted to know if there were any issues with this? From what I understand this is perfectly legal and I can remove the debt without consequence. Can anyone confirm this for me, please?

Thanks

Integraoutsourcing
Posts:11
Joined:Wed Apr 12, 2023 12:55 pm

Re: Are there any consequences for liquidation?

Postby Integraoutsourcing » Fri May 26, 2023 8:12 am

Hey Buddy! Liquidating your company may have consequences, some of them are:

Personal Liability: As a director of a limited company, you typically have limited liability, meaning your personal assets are separate from the company's debts. This means you are not usually personally responsible for the company's tax liabilities. However, there are situations where personal liability can be imposed, such as instances of fraud or wrongful trading. Consulting with a professional will help you determine your specific circumstances.

Liquidation Options: There are different types of company liquidation processes, such as voluntary liquidation and compulsory liquidation. Voluntary liquidation involves appointing a liquidator and initiating the process yourself, while compulsory liquidation is initiated by a creditor, such as HMRC. Seeking advice from a licensed insolvency practitioner can guide you through the appropriate steps.

Starting a New Business: Starting a new business after liquidating your previous company is generally legal. However, it's crucial to ensure you fulfill all legal requirements and obligations associated with registering and operating a new business. This includes adhering to tax regulations and meeting your tax obligations moving forward.

bd6759
Posts:4325
Joined:Sat Feb 01, 2014 3:26 pm

Re: Are there any consequences for liquidation?

Postby bd6759 » Fri May 26, 2023 11:15 am

Strange that you in your opening paragraph that the company has no debts “of any sort”, then immediately refer to a £20,000 debt in your second paragraph.

The company must have made a profit of £100,000 to generate a CT liability of that amount. An Insolvency Practitioner will want to see where that money went, and recover it if not properly accounted for..


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