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Winding up a Limited Company

including wills and probate
Slarti
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Re: Winding up a Limited Company

#232351

Postby Slarti » June 27th, 2019, 3:25 pm

I've shut 2 companies, recently, one earlier this year.

Did the last work to generate income, paid the last bills, deregistered for VAT, did the final accounts and tax returns, paid the little bit of final corporation tax, distributed the funds to me and Mrs S as the sole shareholders, closed the bank accounts and then followed the procedures here https://www.gov.uk/strike-off-your-comp ... s-register.

A bit slow, having to wait 3 months after raising my last invoice, but otherwise simple.

I had taken the precaution of keeping the funds in the company quite low over the last 5 years.

Slarti

Clitheroekid
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Re: Winding up a Limited Company

#234047

Postby Clitheroekid » July 4th, 2019, 10:10 pm

Laughton wrote:The firm I have in mind is fairly local, is a member of the Insolvency Practitioners Association (IPA), say they are bonded and carry insurance. But how can I be sure? I called the IPA to ask what protection I, as a client had, but they were not at all forthcoming. They have a complaints process but that's for when things have gone wrong which is exactly what I'm trying to avoid.

Am I worrying unnecessarily (it's taken me a long time to build up this money)? At least in a bank account I know I'm protected by the government up to £85,000 per bank.

It's a legal requirement of being qualified to act as an insolvency practitioner that the IP must hold an insolvency insurance policy for each insolvency case that he deals with, and such a policy is generally known as a bond.

It will pay out if there has been any misappropriation of client funds by the insolvency practitioner.

The bond is split into two parts. The first part consists of a "general penalty bond" which provides cover for all matters. This covers claims up to £250,000. The second part is a "specific penalty bond", which, as the name implies, is specific to the individual case, and provides cover up to the level of funds in the case. This must be for a minimum of £5,000 and can provide cover up to a maximum level of £5,000,000.

So in your case the IP would probably take out a specific penalty bond of £250,000, which, added to the general penalty bond, would supply cover of £500,000.

Assuming the IP is properly licensed I really don't think you need to worry about seeing the actual documents, any more than you would ask to see a solicitor's professional indemnity policy. However, if you really did want to see evidence I'm sure that any reputable IP would provide you with copies.

Laughton
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Re: Winding up a Limited Company

#234233

Postby Laughton » July 5th, 2019, 3:13 pm

Many thanks Clitheroekid. Very reassuring.

Laughton
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Re: Winding up a Limited Company

#239535

Postby Laughton » July 26th, 2019, 6:00 pm

An update for anyone who is interested.

So far, so simple.

I settled on a local liquidator although I haven't met him or been to his office so it didn't have to be local. He was happy to send me copies of his PI insurance certificate and confirmation of bond coverage. He emailed me a load of paperwork - I had to go to a local solicitor to swear a document confirming that the company could meet all its debts, a neighbour witnessed another indemnifying the liquidator in the event that the company could not meet its debts. All other documents simply needed my signature. Everything then scanned and emailed back to liquidator.

Then I transferred all the company's funds to the liquidator. He sent all the funds to my personal account. I sent sufficient funds from my personal account to the liquidator to repay the director's loan. He then sent these funds back to me.

Documents signing and transfer back and forth of funds all completed in less than one week. Effectively all the company's funds (less the liquidator's fixed fee) now residing in my personal account.

Nothing else for me to do. The liquidator completes final corporation tax return, applies to HMRC for refund of advanced corporation tax paid in resepect of the director's loan and pays that to me when he receives it.

So, as many on here already said, I was worrying unnecessarily.

Liquidator charging me £2,650 inclusive of disbursements plus VAT (VAT is recoverable) which I think is very good value. Bear in mind that my "case" was very very straightforward with the only assets of the company being cash in the bank and the director's loan

Liquidator has been really helpful with lots of free advice in advance. If anyone is in the same boat as me I'd be happy to recommend him (although the process is not yet complete so I guess I should wait until then).

PinkDalek
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Re: Winding up a Limited Company

#239566

Postby PinkDalek » July 26th, 2019, 7:21 pm

Laughton wrote:An update for anyone who is interested.


Yes, thanks, I for one am interested as I'm sure are others.

Liquidator charging me £2,650 inclusive of disbursements plus VAT (VAT is recoverable)


I ask as I'm surprised but how is the VAT recoverable on those fees and by whom?

Laughton
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Re: Winding up a Limited Company

#239594

Postby Laughton » July 26th, 2019, 9:36 pm

In original correspondence from chosen Liquidator, he said "The fees and disbursements will be subject to VAT which should be recoverable from HMRC".

He submits a final VAT return once the liquidation is complete and I assume he will add his fee and disbursements as a cost thereby recovering the VAT.

I did wonder at the time so am only really looking on that being succesful as a bonus.

Laughton
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Re: Winding up a Limited Company

#315127

Postby Laughton » June 4th, 2020, 12:39 pm

Thought I'd add this question to existing thread as it's all part of the same process.

I've now received the bulk of the liquidation proceeds from the liquidator. The only outstanding money is that owed by HMRC in respect of S455 tax paid by the company in respect of a loan made to the director, since repaid.

The monies from the liquidator so far were received in the 2019/2020 tax year whereas the balance (HMRC repayment) will now be received in the 2020/2021 tax year.

My question is, does the capital gain arise on the date of liquidation or on the date that money is received? In the second scenario, does this mean I will have one capital gain liability in the 2019/2020 tax year and a second capital gain liability in the 2020/2021 tax year?

PinkDalek
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Re: Winding up a Limited Company

#315149

Postby PinkDalek » June 4th, 2020, 1:07 pm

Laughton wrote:My question is, does the capital gain arise on the date of liquidation or on the date that money is received?


Broadly it is the date of the distributions that are the relevant dates for CGT disposal purposes.

Random link (I haven't searched further):

https://www.gov.uk/hmrc-internal-manuals/shares-and-assets-valuation-manual/svm107170

When a company goes into liquidation and an interim distribution is made to shareholders, the distribution is treated as a part disposal of the shares for CGT purposes. The tax office may ask SAV to consider the value of shares immediately after a distribution, in order that the Inspector can apportion the taxpayer’s allowable costs in accordance with the formula ...

In the second scenario, does this mean I will have one capital gain liability in the 2019/2020 tax year and a second capital gain liability in the 2020/2021 tax year?


Possibly, depending on your personal circumstances, but the part disposal formula would show you in more precise terms, pulling in the s455 tax within the 'B'.

Laughton
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Re: Winding up a Limited Company

#315205

Postby Laughton » June 4th, 2020, 2:36 pm

Many thanks PinkDalek- so, whilst I was annoyed at HMRC delaying repayment of S445 tax I should actually have been thankful as I will now have another capital gains allowance to set off against the second payment.

Every cloud has a .....(assuming I've understood correctly).

I had a scan through the document on that link you gave and tried searching the gov.cuk site but couldn't find a schedule of what "the taxpayer’s allowable costs" might be. Do you know where I might find such a list?

bluedonkey
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Re: Winding up a Limited Company

#315230

Postby bluedonkey » June 4th, 2020, 3:44 pm

Laughton wrote:Many thanks PinkDalek- so, whilst I was annoyed at HMRC delaying repayment of S445 tax I should actually have been thankful as I will now have another capital gains allowance to set off against the second payment.

Every cloud has a .....(assuming I've understood correctly).

I had a scan through the document on that link you gave and tried searching the gov.cuk site but couldn't find a schedule of what "the taxpayer’s allowable costs" might be. Do you know where I might find such a list?

In this scenario, typically the allowable costs for capital gains purposes are going to be the total paid for the shares when they were issued to you. In the case of a small owner managed company with say 100 £1 shares, this may just be 100 x £1 = £100.

Laughton
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Re: Winding up a Limited Company

#315272

Postby Laughton » June 4th, 2020, 5:48 pm

Oh well! Every little helps.

Laughton
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Re: Winding up a Limited Company

#322076

Postby Laughton » June 27th, 2020, 3:00 pm

Thought I'd post another update (in case it helps anyone else who might find themselves in a similar situation).

Still waiting for the repayment of S455 tax (used to be called ACT, I think) to the liquidator and therefore conclusion of this process.

I thought that my tax return would be much more complicated this year (2019-2020) because of the sizeable Capital Gain (which I've never had before) and worrying about correctly claiming Business Asset Disposal Relief (used to be called Entrepreneur's Relief) so I emailed a local firm of accountants that I have had very limited dealings with in the past to see (a) if they would undertake the work and (b) if, so what they would charge. Despite chasing them up I didn't hear from them.

So, I decided to have a go at submitting my return online as usual and see how I got on. I remembered that it is possible to fill everything in, check and abandon the submission if the numbers are not as expected.

Took me approximately 1 hour. The online form calculated the capital gains tax correctly with correct reduced rate in respect of Entrepreneurs Relief and tax free capital gains allowance.

So, I have today submitted my return and hope that HMRC doesn't see any reason to query any of my figures.

Laughton
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Re: Winding up a Limited Company

#443352

Postby Laughton » September 18th, 2021, 5:30 pm

Final update from me on this thread, just in case it's of interest to anyone.

I finally received the repayment of S455 tax from HMRC via the Liquidator this week and that therefore completes the liquidation of my company.

HMRC admitted their level of service was lower than should be expected but blamed it all on Covid, many of the staff normally dealing with S455 having been re-assigned to other duties and majority of their staff working from home.

One upside for me is that the receipts by me spanned three tax years so I was able to take advantage of 2 full years worth of Corporation Tax allowance (2 lots of £12,300) plus £2,000 received in the current tax year that I won't have to pay Corporation Tax on.

If you're thinking of going down the same route and you know you have a large repayment from HMRC due then it's definitely worth asking the Liquidator to make "in specie" payments if it means spreading the proceeds over multiple tax years.

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Re: Winding up a Limited Company

#443359

Postby bluedonkey » September 18th, 2021, 5:47 pm

Glad it worked out. You mean Capital Gains Tax Allowance, not Corporation Tax allowance.

Laughton
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Re: Winding up a Limited Company

#443365

Postby Laughton » September 18th, 2021, 6:02 pm

You're right, Capital Gains Tax Allowance, of course.


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