UK - Closing Down a Limited Company

JAA17

My brother and I have a limited company in the UK we wish to shut down as cheaply and easily as possible.

The company has had no income for years. We still need to file our April 2024 to March 2025 accounts (which again is zero income).

We have some old colour printed boxes (of a product that failed to sell) that were on the accounts as stock at cost of production at £2000. These have no value which we are going to put in our local tip. How do we mark that down to £0 on our accounts?

My brother and I as directors have given the company money, which it obviously owes us, but we want to write that off.

Our company owes nothing to any one else. We have no bills, no business premises, no web site, no assets like computers, nothing.

We have a company bank account with only £30 in it which we gave the company as directors to pay the yearly Company House fee and bank fees through the years.

We have set the close date of 31st of March 2025, which is the last day of our 2024 to 2025 accounts.

So what do we need to do to shut this company down?

Bookworm225

so have you been filing dormant company accounts for the last few years?

presumably you do not have access to an accountant, so you need to 
- establish what reserves the company has on its balance sheet - share capital and P&L brought forward.
- confirm the balance on the respective director loan accounts (DLA), after all the $30 in the company bank appears to have come from you personally and therefore may be historic things which means you have a net + or -ve balance

you can close down a company with a -ve balance sheet provided that no other creditor objects to it, the keys ones being
- HMRC in respect of corporation tax (is therefore a historic balance still owed?)
- HMRC re Vat (if applic - has the company deregistered yet?)
- HMRc re any PAYE (if applic) close PAYE registration if necessary 
-  the bank ! 
- the directors in terms of any DLA owed to them if applic

You are legally required to notify each of the intention to close and giving them time to object 

I assume the company has been filing dormant accounts with companies hse and HMRC so will need to produce a final set of accounts and final tax return as part of its close down. Bear in mind you can't close the bank until everything is paid from it so the order you do things in matters hugely unless you want to start paying things personally and reflecting that in the relevant DLA  balances. Are you competent to produce those accounts bearing in mind that the scrapping of the stock would appear to be the only transaction and will create a net P&L loss that will obviously impact the reserves on the balance sheet ?

the mechanics of closing are explained in various places but trying to DIY that is a steep learning curve...

JAA17

Thanks Bookworm225. I have not been filing dormant company accounts for the last few years, but the tax office suggested I might choose to do so because our sales have persistently been zero. We do not have an accountant. But, everything balances.

We owe no PAYE, no VAT and no Taxes. We do not owe the bank anything. All the debt has been paid by my brother and myself, so we are the only interested parties and we are happy to write it off.

We have closed the bank and they are sending the check to my brother. We will put that in the accounts. We have informed HMRC today and they have noted we are 'dormant' from their point of view onwards, and after we submit 2023-2024 they will not be requiring tax returns.

In their form we have found AC14 has in its calculation 'cost of stock start minus cost of stock end' and since we have had no sales or additions to the stock this appears the entire calculation, ie £2000 minus £0 = £2000.

Is that correct? Is it AC14?

This stock was bought over 20 years ago and is obsolete. Its just boxes of a product that did not sell. For years we have put on our accounts, 'Stock is valued at cost'.

We were thinking of writing something like, "Stock is obsolete being over 20 years old and unsellable, so stock has been trashed'.

Do you think that OK?

Our accounting software, a really old CD version of Quickbooks, allows you to write off stock by saying 0 is left. It all seems to put everything in the right place. It all balances.

Bookworm225

you may not have been filing tax returns with HMRC but all dormant companies must still file dormant company accounts with Companies House.

Are you 100% certain all is up to date with CH? It appears you have been submitting the annual confirmation statement but that is not the only admin process required of a dormant company

Has the cheque been cashed yet? If not then how can the bank have closed the account?

As you are using QuickBooks you won't have to understand the accounting of the stock write off, so yes what you intend to do sounds OK.

Bookworm225

wording a little more professional than trashed might be more appropriate! Scrapped