What is the best way to close my small business?

andyhm

I run a small business trading on eBay. I used to run it part time but took out a small loan with my bank and went full-time in August 2010. For the first 6 months or so everything was fine but recently I have been struggling to buy stock and profits have dipped. I want to shut it down once I have a job (I am selling what remains of the stock and paying myself as usual at the moment) but have a few concerns...

I pay myself a small salary and the rest as dividend with the tax due 9 months after company year end. My accountants advice is to stop trading and submit a DS01 form to companies house and that's the end of the company. There will not be any accounts submitted for the last year so HMRC will not chase for the Corporation Tax due on the dividends because they will never know about it. HMRC chase for things when they become due and without a set of accounts being prepared nothing becomes due. The Corporation Tax that should be due is approx 2K.
There is a possibility that HMRC will object to the DS01 route but the company will have no assets worth speaking about and little cash in the bank so will not be able to pay any CT anyway and without a set of accounts how much CT would it owe anyway?

What are peoples thoughts on this? Is this a workable solution?

steve1980

Surely, if your accountant (who I assume is qualified!) is advising you what the best option is what, why would you ask on a forum?

andyhm

Yes, my accountant is obviously qualified but there is no harm in asking for a second opinion or hearing from somebody who may have done the same thing.

paddyrg

I am not an accountant, so take this as you find it, but any scheme which involves not telling HMRC about, and then keeping any money due to them seems hazardous to me. And if you're doing so knowingly, that's tax fraud, they don't usully take that with good humour. And the money for hospitals, etc has to come from somewhere - why not just pay the tax you owe?

andyhm

Hi

I don't know how much they are owed as until the accounts are produced we don't know the profit and I don't have the money anyway as the company is struggling.

martindow

Why don't you draw up your accounts? By the sound of it there is not going to be much in the way of profit to be taxed. Have you been declaring your salary and paying NI?

Premier_2

andyhm wrote: »

... My accountants advice is ...

Was that really your accountant's advice? :huh:

If so I can fully understand you wanting a second opinion.

I would suggest you go and find another accountant and see if he concurs the advice given to you by your existing accountant :cool:

agrinnall

Premier wrote: »

Was that really your accountant's advice? :huh:

If so I can fully understand you wanting a second opinion.

I would suggest you go and find another accountant and see if he concurs the advice given to you by your existing accountant :cool:

I would agree with this suggestion. While you do need to close down the business with Companies House I would be very surprised if HMRC don't require final accounts to be made up and submitted and any corporation tax due to be paid. You really don't want to make an enemy of HMRC so good accountancy advice is vital, and I'm not sure that's what has been given.