Closing Limited Company

paul9494

Hi,
I have been a single director limited company for many years but recently got a good staff job so am in the process of closing my limited company, there has been no trading for months,
I now have £400 left in my business account but i still owe £900 out in debts, this debt is actually expenses owed to myself. I don't want to close the account with debts so i want to simply put my own money (£500) into the account then pay back myself the £900, then close the account whilst level/ or in profit.
My question is how do i put my own money into my business account, i don't want this to be considered a loan, or to be liable for tax or VAT (i am vat registered).

LHW99

My understanding is that if you physically put money in the account it is regarded as a directors' loan.
Could you not just 'write off' the debt, as it is to yourself?

paul9494

Thanks, writing off the debt sounds like what i need to do, never done anything like that before so I will look that up, hopefully its something simple to implement into my accounts.

TheTracker

Unless it's already been reported in accounts to HMRC, simply unclaim the expenses. That is, take away the liability by removing the expense claim.

Or you could sell your company a service to make £500 profit then pay off the expenses, though you'd have to report this in accounts. Or write it off. Or if your business has assets buy them personally for £500. If you are in the VAT FRS deregister first.

Or ask your accountant

antrobus

paul9494 wrote: »

Hi,
I have been a single director limited company for many years but recently got a good staff job so am in the process of closing my limited company, there has been no trading for months,
I now have £400 left in my business account but i still owe £900 out in debts, this debt is actually expenses owed to myself. I don't want to close the account with debts so i want to simply put my own money (£500) into the account then pay back myself the £900, then close the account whilst level/ or in profit.
My question is how do i put my own money into my business account, i don't want this to be considered a loan, or to be liable for tax or VAT (i am vat registered).

Inform HMRC that the company has ceased trading.
Submit the tax return and accounts for your final year.
Close the company bank account, and transfer the balance into your personal account.
Then do nothing and CH will eventually strike off the company.

No one will care that your company still owes you another £500.

paul9494

thanks, i like this idea the best, i am going to do this, so busy with my new job i keep putting it off but going to do it all next week, thanks again

paul9494

TheTracker i don't have an accountant that's why i was asking the question

Aquamania

LHW99 wrote: »

My understanding is that if you physically put money in the account it is regarded as a directors' loan.

Not quite.

A director's loan occurs if a company loans money to one of it's directors; a tax liability may occur in such circumstances.
https://www.gov.uk/directors-loans/overview

There is no issue with a director lending money to a company (assuming no interest is charged, etc)

However in this case it wouldn't make sense.

The OP is owed £900 by his company, but the company only has £400 left. If the OP were to lend £500 today to the company to pay off the balance of what is owed, then a new debt of £500 would also be created, and so still be owed to the OP.

LHW99 wrote: »

Could you not just 'write off' the debt, as it is to yourself?

Therefore this is the best solution