Closure of limited company with cash assets

tastyfish

Hi, with wider use of IR35 I no longer have use for my limited (personal services) company. It has about £5,000 in the bank and there are two shareholders, myself and my partner. Can I simply divide the remaining cash according to shares and declare that income on my personal tax return as capital gains? How do I reflect that on the company accounts?

My worry is that even if I empty the bank account if the transfer of cash is not recorded anywhere in the company accounts can the Crown lay claim to it under bona vacancia once the company is closed? Or will they simply get nothing as there will be nothing in the bank?

Savvy_Sue

IDK, but I do know that you're right to empty the bank account before closing the company. How you do it, I'm not sure, but if there's no money there, I don't see how bona vacantia could apply. 

However, what you must ensure is that you've paid all the company's debts - perhaps especially to HMRC! 

And I'm guessing from this that you haven't used an accountant for filing your company accounts? If you have, they'd be the person to ask!

Peter999_2

I stopped contracting in 2020 due to all the jobs around being in scope of IR35 so it was no longer worth it.
I then paid myself £1,000 a month but didn't actually work again (I did intend to work but nothing really came off).

I had an accountant and I kept him on as he was pretty cheap and he did everything for me.    When the company got down to £20,000 left in 2024 the accountant said I could close down the company and take out the £20,000 tax free using the capital gains rule.   He closed down my company using a  DS01 voluntary strike-off and used up my capital gains tax allowance over the years. 

I just took the £20,000 out of the company and shared it with myself and the other shareholder (my now ex-wife).    You go to gov.uk and choose "strike off a company" (Strike off your limited company from the Companies Register: Overview - GOV.UK) .  This webpage explains exactly what you have to do regarding the strike off.

I took the £20,000 immediately, then I had to wait a while so they could put a notice in the gazette to allows any creditors to dispute the strike off (I had no creditors).    I then got a notification that the company had been successfully dissolved and that was that.  He told me that my accounts didn't have to be filed with companies house and he said that was fine (he has been an accountant for donkeys years and actually used to work for the HMRC before that.)

He then told the HMRC that I shouldn't need to complete a self-assessment anymore and I got confirmation from HMRC that they were in agreement with that.

monkey-fingers

Are you definitely not doing any outside IR35 roles again?
I was chatting to my accountant about this. I mean, you could take the money as dividends after April and only pay 10% on it. Then make the company dormant, which means you don't have to go through the VAT/Payroll/Corporation tax nonsense if you win another role.

tastyfish

Peter999_2 said:

I stopped contracting in 2020 due to all the jobs around being in scope of IR35 so it was no longer worth it.
I then paid myself £1,000 a month but didn't actually work again (I did intend to work but nothing really came off).

I had an accountant and I kept him on as he was pretty cheap and he did everything for me.    When the company got down to £20,000 left in 2024 the accountant said I could close down the company and take out the £20,000 tax free using the capital gains rule.   He closed down my company using a  DS01 voluntary strike-off and used up my capital gains tax allowance over the years. 

I just took the £20,000 out of the company and shared it with myself and the other shareholder (my now ex-wife).    You go to gov.uk and choose "strike off a company" (Strike off your limited company from the Companies Register: Overview - GOV.UK) .  This webpage explains exactly what you have to do regarding the strike off.

I took the £20,000 immediately, then I had to wait a while so they could put a notice in the gazette to allows any creditors to dispute the strike off (I had no creditors).    I then got a notification that the company had been successfully dissolved and that was that.  He told me that my accounts didn't have to be filed with companies house and he said that was fine (he has been an accountant for donkeys years and actually used to work for the HMRC before that.)

He then told the HMRC that I shouldn't need to complete a self-assessment anymore and I got confirmation from HMRC that they were in agreement with that.

Cheers - that's what I hope to do. I used to use an accountant but after I stopped taking IR35 roles it seemed pointless paying someone to do the accounts when it was so easy (zero income, just a few expenses/depreciation items to record, no corp tax to pay. I kept it open just in case.

Good point about not having to submit the accounts.

You watch, I'll close my company down and someone'll come along and offer me a non-IR35 role!

tastyfish

monkey-fingers said:

Are you definitely not doing any outside IR35 roles again?
I was chatting to my accountant about this. I mean, you could take the money as dividends after April and only pay 10% on it. Then make the company dormant, which means you don't have to go through the VAT/Payroll/Corporation tax nonsense if you win another role.

Yeah, that is an option. To be fair the IR35 route has been fairly good to me as my rates shot up (maybe because so many contractors pulled out) and it's easy to pay a good umbrella company (Nasa are good, but the 'giant' one are absolutely hopeless and should be avoided) as they also allow me to salary sacrifice my pension as an employer. Obvs those rules are also changing, yeah, thanks Rach, targeting ordinary people instead of billionaires... ) so who knows what happens in the future.

It's almost like successive governments hate contractors, only see the day rates but not the huge benefits to companies who get instant skills and don't have the 'baggage' of permies. I could go on but that'll be off-topic...

Grumpy_chap

tastyfish said:

You watch, I'll close my company down and someone'll come along and offer me a non-IR35 role!

They are becoming more common.  In my sector at least.