SUDDEN DEATH of my partner - Stuck in limited company with 2nd property - HELP!

buildingbee

Thank you so much again for all the helpful replies and lovely warm comments of support/condolences.  So sorry to those of you who have also lost their loved ones. I feel your pain.

The company does have a seperate bank account and it's in our joint names and I have my own login.

Thank you for confirming that I can take money (that has been loaned) out of the company:-

1. Is there a limit to this?  For example hypothetically, if we lent a director's loan of £1000 and £900 is remaining after expenses, am I okay to withdraw the full £900 without any sort of penalties?  
2. When I'm transferring money out of the company to my personal account, do I simply put in the transfer reference "LOAN REPAYMENT?"

Sorry if it sounds like I'm repeating - I just want to be sure that I've understood what your telling me and also what is and isn't allowed.

I know some of you have said to employ an accountant, but I contacted a couple of companies and they gave me quotes of between £600-£900 as a starting point, which sounds ridiculously expensive.  I don't feel borrowing more money from family/friends is the answer - At least not for me, but I'll certainly think about it.

@gettingtheresometime - I'm so sorry for your loss.  I don't know how you managed to do everything yourself - you must be a stronger person than me.  Can I ask how you did everything yourself? Did you know the process of how to wind-up a company?

lrzxft

buildingbee said:

1. When I'm transferring money out of the company to my personal account, do I simply put in the transfer reference "LOAN REPAYMENT?"

Theoretically the answer to this is both yes and no, from my experience. The complexities lie in when you come to file your confirmation statements/end of year accounts (which could be due soon dependent on the age of your company as the tax year comes to an end); it would be advisable to get the assistance of an accountant if you're unsure what you're doing.

Was your partner using any accountancy software to track the expenses, loans, income, etc for the company (such as FreeAgent, QuickBooks) or just doing it be hand? On your confirmation statement there is a section for loans (which is listed as "Creditors: amounts falling due within one year" this is where funds from a Directors Loan would be on the balance sheet (however much money you lent the company). When you make a transaction, software such as FreeAgent is intelligent enough to work this section of the balance sheet out, and so when you pay back into your bank account from the company, essentially pulling back the Directors Loan, you'd be able to categorise this as "Loan Repayment" and the software would note this as such and update the balance sheet as necessary.

I anticipate that your husband probably wasn't using any software (?) and as a result, this would mean (without hiring an accountant), you'd need to manually dig through bank statements to figure all of this out (and how much of the DL is left/has been called back); it all gets a bit complicated, but I believe there is some free software provided by the government for this but it isn't advanced and I'm not sure if it does what I mentioned above.

Theoretically, you could put a reference as "Loan Repayment", and that would be fine for the purposes of transferring the money, as long as the balance sheet is correct when you file it. HMRC shouldn't ask to see the companies bank statement or anything like that unless they decide there is something fishy going on and they want to audit the company, so it technically shouldn't matter what the reference says as long as it helps you — or your accountant if you get one — figure out how much has passed between yourselves and the company.

(Note: I am not an accountant and this does not constitute financial advise, but is drawn from my experiences of running a LTD company).

MobileSaver

buildingbee said:

1. Is there a limit to this?  For example hypothetically, if we lent a director's loan of £1000 and £900 is remaining after expenses, am I okay to withdraw the full £900 without any sort of penalties?  

There is no limit. You can withdraw or pay back the full director's loan (or at least as much of it as you have cash in the bank) without any "penalty".

buildingbee said:

When I'm transferring money out of the company to my personal account, do I simply put in the transfer reference "LOAN REPAYMENT?"

Yes, anything that makes it clear the transfer is a loan repayment rather than taxable income or dividends would be suitable.

I agree with others that you shouldn't worry too much about the intricacies of running a Limited company at this point however I would suggest you log in to the Ltd company's HMRC tax account and Companies House WebFiling account at the earliest opportunity just to make a note of the various statutory deadlines for filing accounts and confirmation statements etc.

The various documents that need filing are not necessarily difficult to do but if you miss the deadline by even a day then HMRC/Companies House may start dishing out £150 fines which is probably not what you need if money is already tight.

buildingbee

Thank you for confirming that I can withdraw a director's loan without penalty and that I can simply label a transfer as a Loan Repayment.

I have checked and the confirmation statement is not due until mid-feb 2024.  Come to think of it, I remember him completing the confirmation statement a short while ago.  So I assume this is okay for now?

Regarding accountancy software - The answer is no, he was not using any accountancy software, but he also wasn't doing it by hand because I remember him saying that a Revolut Business account allows you to easily manage any incoming/outgoing transactions and I also remember him taking photos of any invoices or expense receipts and uploading them to our Revolut account and labeling them as needed. Would this be sufficient and if so, how would show them to HMRC if this was ever requested.
One question on my mind is what happens if I didn't bother winding up the company and let it run?  Would HMRC make me personally responsible or is it the fact that being a limited company, I wouldn't be responsible?

MobileSaver

buildingbee said:

Thank you for confirming that I can withdraw a director's loan without penalty and that I can simply label a transfer as a Loan Repayment.

I have checked and the confirmation statement is not due until mid-feb 2024.  Come to think of it, I remember him completing the confirmation statement a short while ago.  So I assume this is okay for now?

Regarding accountancy software - The answer is no, he was not using any accountancy software, but he also wasn't doing it by hand because I remember him saying that a Revolut Business account allows you to easily manage any incoming/outgoing transactions and I also remember him taking photos of any invoices or expense receipts and uploading them to our Revolut account and labeling them as needed. Would this be sufficient and if so, how would show them to HMRC if this was ever requested.
One question on my mind is what happens if I didn't bother winding up the company and let it run?  Would HMRC make me personally responsible or is it the fact that being a limited company, I wouldn't be responsible?

If Companies House says nothing is due until 2024 then you have almost a year before you need to worry about that.

The winding up and statutory declarations etc. are handled by Companies House (not HMRC) and as a director you have a legal obligation to perform your statutory duties. My understanding is that in the past Companies House generally just kept sending reminders however failing to deliver the correct documents is actually a criminal offence which carries large fines (and a criminal record!) and I believe more recently many directors are prosecuted every year.

As it only costs £10 to strike-off the company once it hasn't "traded" for the previous three months I'd suggest doing it properly is a no-brainer (but obviously not until after any assets such as a property have been liquidated and distributed unless you want to gift the property to the Crown!)

Similarly as a director you have a legal obligation to submit tax returns by certain dates and HMRC can in some instances make you personally liable for fines and/or taxes due so given that the tax return for a SPV should be much simpler than a "normal" business it would be sensible to do it properly.

Yes, your Revolut account transactions with copies of all invoice and receipts is all you'll need for HMRC - the key is to have evidence of every transaction so that when you produce your accounts all the figures match and balance down to the penny. When the time comes I'm sure a number of people here will be able to help with that (and/or advise you to speak to a professional if it's deemed necessary at the time.)

Sarahspangles

Could buildingbee not sell the company to a buyer along with the property?  There are costs involved in setting up a company so if someone wanted to have one 'ready made' might that actually be a selling point?

km1500

One question on my mind is what happens if I didn't bother winding up the company and let it run?


Instead of winding up the company, you could make it dormant, but I am not sure why you would want to do this

buildingbee

I'm thankful for your advice and glad that I've got until next year to sort things out with the company.

Apologies for so many questions.

Regarding the Company:-
- My partner setup the company so that our residential address is the place of trading, but the correspondence or registered address is elsewhere.  So if there was money owed to the company, can they send bailiffs to our residential home to recover any costs?

Winding-up - could you please clarify:- 

- Do I not need to contact HMRC at all? 

- Does winding-up only cost £10?

- Hypothetically speaking, if I sold the company property today (to pay off the residential mortgage) and then didn't trade for 3 months, can I strike-off the company?
- Do I need to make the company dormant for 3 months before striking it off?

- Once I strike-off the company, do I still need to submit any tax returns or confirmation statements?

Regarding Revolut:-

- If there was an honest mistake in the calculation of a transaction, can HMRC hit me with a fine and can they come after me personally?

MobileSaver

Sarahspangles said:

Could buildingbee not sell the company to a buyer along with the property?

They could in theory but no-one would be able to buy the company using a normal residential mortgage and even cash buyers would be wary of any issues or liabilities associated with the company so probably not a viable option.

km1500 said:

Instead of winding up the company, you could make it dormant, but I am not sure why you would want to do this

You still have to file annual documents for dormant companies so there's no benefit for the OP.

kazwookie

Sorry for your loss, have a read of this. One thing I do remember my accountant telling me, was to do things in the right order, I did it myself and was easy if you follow the guidlines.

https://www.gov.uk/closing-a-limited-company