How realistic for a lamen to file company accounts/close a business?

goomba

Hi,

My brother ran a small business and due to personal issues/circumstances it has gone under and accounts have not been filed for some time. The business hasn't been trading for about 8 months now, there are approx 1 year of accounts to submit starting from June 2015.

I have submitted all the information to his accountant myself, all I have given were Paypal logs and bank statements which were enough for him to compile accounts. However, he is seeking payment of £2000 for backdated fees and says there is a £1500 penalty from HMRC for not filing accounts on time.

Once I provided the information he had sorted everything out within a day or two so I do not believe that there is £2000 worth of work to be done, although I have no problem with him asking for that payment for his services and appreciate that he has expertise that I do not.

I'd like to know how realistic it is for me to do everything myself (annual accounts to Companies House and tax returns to HMRC) and also close the company or change to Sole Trader status which the accountant recommended.

I'm fairly tech savvy so with the help of some accounting software I hope it is feasible. I 'm decent with numbers/maths but have no education or experience in accounts.

I would really appreciate any advice on this or if it would be better to pay the accountant and have him sort it out. Any further advice on the best accounting software and links to step by step guides on how I would go about this would also be brilliant and I'm also looking into this myself.

Many thanks.

fishybusiness

Lots of ways to deal with this if a ltd company.

it has gone under and accounts have not been filed for some time. The business hasn't been trading for about 8 months now,

Gone under meaning insolvent?

Sounds to me like the 2k is 1.5k of fines and 0.5k fees - does that sound right to you?

I'd like to know how realistic it is for me to do everything myself

In my experience CH are easy to deal with, though filing comapny accounts with HMRC is a little more tricky.

So, sort out exactly what you owe to who - if you are prepared to pay the 2k, and close the company, it is probably your best and easiest option.

If the company has no money to pay the fines and accountant, you could use the spongebob plan explained in detail on the ukbusiness forums.

In basic terms, you need to have not traded for 3 months, write to all creditors to explain debt circumstances, and send off a DS01 to CH.

Given time, company is dissolved, accounts technically should be filed but often are not, and comeback usually does not happen unless directors loan account overdrawn.

More to it than that, you'll have to go and read.....

goomba

Thanks I appreciate your response. The business wasn't being properly maintained and was running at a loss until the money ran out. The bank account has now been closed, if any outstanding fees need to be paid it would be from my personal savings. The accountant was paid up until the business stopped trading and for the whole period that the accounts need to be filed. However since the business stopped trading 8 months ago and he hasn't been contacted during that time, he is asking for his fees for this 8 month period (£1600) + £300 to close the business otherwise he will not file the accounts. I hope that makes sense... So the £1900 is in addition to the £1500 HMRC fine. Would I be correct in thinking that because the company was running at a loss there would be no corporation tax or any other taxes/fees to pay?

I've briefly read about the Spongebob plan and seems this could be the best course of action. I will read up on it fully now. Just one question, if the company is dissolved/struck off would that have any implications on my brother and his ability to own/run a business in the future? The accountant did say if we don't file accounts the company would eventually be struck off and directors also struck off the register, but I'm not sure if this also applies if we voluntary dissolv the company.

Many thanks again.

fishybusiness

I'd be tempted to ask for my accounts as far as they are paid up, guess it depends on how your working relationship is.

Yes, loss making means no CT, as long as the accounts can verify.

If Directors Loan account is overdrawn, that would call in to question the loss - is there any money owing to the company due to director borrowing?

Strike off of company has no effect on directors unless the company went through insolvency proceedings, or legal challenge for wrongful trading etc. Any new company will probably need trading insurance of some kind and above issues could cause insurance problems.

Yes, if you don't file with CH they will eventually strike off. If you don't file with HMRC they will keep chasing - two different processes. Strike off with CH means company no longer exists, in theory no one can chase it for money.

Think you need to clear up likelihood of HMRC chasing the accounts if struck off - my understanding is that they will not bother you, and DS01 to strike off is best way forward.

Try asking about HMRC on UKB, they are very helpful.

goomba

I'm unsure about director loans and will need to ask about that. If I was to pay the accountants fees and file the accounts correctly, would there be any chance of HMRC writing off the fine since the business accounts are empty?

Thanks again for your advice it really has helped a lot.

fishybusiness

I honestly don't know - it is a question best asked to your accountant.

Personally I would DS01 the company at this stage - no bank account, no assets, no money, no debts, there is nothing to take.

UKB suggest HMRC will chase for a while and then stop as company no longer exists.