Unsure how to proceed with tax return/closing down limited company

Newheight13

Hi,

Its approaching the anniversary of when I setup up a Private Limited Company instead of a Sole trader account I would seem.

I have been trading on eBay for around 8 months, haven’t traded in the last few months and I need to do a tax return and want to close down my company as it was just a bit of side income for me more than anything and don’t wish to continue. 

Is this easy enough to do myself?  Is it expensive to use an accountant to do this?

I also purchased a lot of items I sold through my personal account, can I claim for this or should I have purchased through my business account? 

Thanks

Robert_McGeddon

Newheight13 said:

Hi,

Its approaching the anniversary of when I setup up a Private Limited Company instead of a Sole trader account I would seem.

I have been trading on eBay for around 8 months, haven’t traded in the last few months and I need to do a tax return and want to close down my company as it was just a bit of side income for me more than anything and don’t wish to continue. 

Is this easy enough to do myself?  Is it expensive to use an accountant to do this?

I also purchased a lot of items I sold through my personal account, can I claim for this or should I have purchased through my business account? 

Thanks

See:

Link 1

Link 2

If you've been submitting VAT returns, making PAYE filings etc then HMRC will be aware of you and you should prepare and submit accounts and go through the formalities for strike-off. It's not difficult but is highly procedural and time-consuming. If you use an accountant it will cost at least a few hundred.

If you haven't got involved with HMRC you might consider saying the Ltd Co didn't actually trade and account for the income and expenses as a sole trader. As a general rule all purchases for resale can be claimed as an expense - so remember to deduct stock held at closure.

Newheight13

Hi, thank you for this. If I say it didn’t trade, won’t they ask my bank statements that will show I did? If I submit a tax return for a sole trader now, will that cover me?

Thanks 

macman

Why would you claim the ltd company didn't trade if it did, even if only for a short period? If so, you need to account for any trading within the relevant tax year.

Pennywise

Newheight13 said:

Hi, thank you for this. If I say it didn’t trade, won’t they ask my bank statements that will show I did? If I submit a tax return for a sole trader now, will that cover me?

Thanks 

It's not what you "say".  It's the facts that matter.  Did you trade as a limited company or as a sole trader?  What is the trading style/name on your purchase invoices, ebay/paypal account, sales invoices, etc etc.  Did the income/expenses go through a personal bank account or the company bank account.  You can't change historical facts for your convenience.

ader42

To be fair it was @Robert_McGeddon that suggested saying to HMRC that the company didn’t trade, not the OP’s idea. Yes, the facts are the facts, if the purchase orders and invoices were in the name of the Ltd Co. and the payments all went through a Ltd Co. bank account, the facts are the facts.

OP might not have been VAT registered and there might have been no PAYE either.

That said, the accounts will need to be prepared by and probably best submitted by an accountant, and it will cost at least £300 + VAT in my experience.


It’s not exactly a simple matter to close a Ltd. Company:

https://www.greenfieldrecovery.co.uk/company-closure/striking-off-a-company/


You might prefer to take the company dormant:

https://www.simplybusiness.co.uk/knowledge/articles/2020/09/what-is-a-dormant-company/

Robert_McGeddon

ader42 said:

To be fair it was @Robert_McGeddon that suggested saying to HMRC that the company didn’t trade, not the OP’s idea. Yes, the facts are the facts, if the purchase orders and invoices were in the name of the Ltd Co. and the payments all went through a Ltd Co. bank account, the facts are the facts.

OP might not have been VAT registered and there might have been no PAYE either.

That said, the accounts will need to be prepared by and probably best submitted by an accountant, and it will cost at least £300 + VAT in my experience.


It’s not exactly a simple matter to close a Ltd. Company:

https://www.greenfieldrecovery.co.uk/company-closure/striking-off-a-company/


You might prefer to take the company dormant:

https://www.simplybusiness.co.uk/knowledge/articles/2020/09/what-is-a-dormant-company/

I used the word "consider" in my earlier post deliberately.

OP, you haven't yet said whether you've submitted stuff to HMRC and therefore formalised the Ltd Co as a trading entity. Have you? If you have then you'll almost certainly have to file Ltd Co accounts.

Your private and Ltd Co transactions appear intertwined, e.g. "I also purchased a lot of items I sold through my personal account, can I claim for this or should I have purchased through my business account?" It is likely that either you or the Ltd Co were acting as agent for the other (and probably as bailee too) at least some of the time. That's why I said you might consider accounting via sole trader status. However, depending on value of closing stock there might be advantages for you in preparing Ltd Co accounts whether or not you have to! Not enough detail to understand the opportunities.

IMO ader42's comment about dormancy is worth considering.

Bottom Line:

   1  All profits (Sole + Ltd Co) should be returned somewhere, and

   2  Go for the simplest possible exit! (But if in doubt file Ltd Co accounts).

If you know a tame accounant a 10 minute chat might help clarify things - he could get a handle on volumes, classes and values of transactions much more readily than piecemeal on a forum.

DBdoobydoo

ader42 said:

To be fair it was @Robert_McGeddon that suggested saying to HMRC that the company didn’t trade, not the OP’s idea. Yes, the facts are the facts, if the purchase orders and invoices were in the name of the Ltd Co. and the payments all went through a Ltd Co. bank account, the facts are the facts.

OP might not have been VAT registered and there might have been no PAYE either.

That said, the accounts will need to be prepared by and probably best submitted by an accountant, and it will cost at least £300 + VAT in my experience.


It’s not exactly a simple matter to close a Ltd. Company:

https://www.greenfieldrecovery.co.uk/company-closure/striking-off-a-company/


You might prefer to take the company dormant:

https://www.simplybusiness.co.uk/knowledge/articles/2020/09/what-is-a-dormant-company/

On the contrary a few years back I found it a very simple matter to close down my PSC. I just filled in form DS01 & sent it off to Companies House. Nowadays you can even do it online.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1096469/DS01_V7.2.pdf

ader42

What is a PSC? 

I assume it hadn’t started trading so you didn’t need to file final accounts?

Newheight13

Thank you for all comments.

It was around 10k in sales from Nov 21 until March 22, consisting of Ebay sales.

Nothing has been communicated to HMRC, other than registering the name. 

It was just a bit of a side income but couldn’t dedicate time too it so closed my eBay account in March. 

Thanks 

Newheight13

Just to add, around 5k profit