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Closing down a limited company

Closing down a limited company

My client has asked me to close down their limited company, this is not something that I have been involved with before.

Their accounts period ended at the end of Jan-11 and they ceased trading during this period.  However, they still continue to have some business insurance payments and loan repayments going through their bank account.  In addition to this I have found that, due to errors in calculations, they owe a small amount of VAT. 

I am unsure for what period I prepare these accounts.  Do I prepare the accounts to Jan-11, writing off assets to zero as they can't continue to be depreciated.  Would I then need to submit a new set of accounts for the period to date, where they will empty their bank account, repay their loan/VAT/my fees?

Also, can the company be closed down if the directors loan account is a debit balance?

Many thanks for any advice!

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By geoffmw
28th May 2011 23:56

please provide

some figures.

From the little info you have given this one may require a licenced inssolvency practitioner to be involved.

Is there any Corporation Tax due? If there were CT profits in any of the 3 previous years and there is now a loss there could be some tax to recover.

The director(s) can be pursued to repoay the loan(s).

In the situation you describe I would not want to do any work for the company without payment up front.

Be careful that you don't do something that you are not entitled to do.

 

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29th May 2011 12:02

Closing down a limited company

Thanks very much for your response.

They are making an approx £8k loss for the period to Jan-11.  In the previous three years they have paid corp tax of £137,£250 and £2,400.

The amount of VAT that they have underpaid is £211.

They have a negative balance sheet at the end of Jan-11 of £6.5k.  This consists of the loan owing £8.8k, a credit directors loan £1.8k and a positive bank balance of £4.2k.  This includes the write down of assets of approx £4k to zero. 

They have been lent funds by a family member to pay the loan off and this has been deposited into their bank account in May-11. 

Looking to the period after Jan-11, and assuming only the major transactions of paying the loan off and withdrawing the cash from the bank account I anticipate that the balance sheet would end up as negative of £6.4k being a credit directors loan (contrary to my original thoughts on it being overdrawn, I did some more work on this last night after posting this question).  I have ignored any reclaim of tax in this example.

They are happy to pay me up front.

Is this a case where an insolvency practitioner would be required?  My understanding was that as the funds were available to repay all debts then this would not be the case?

Thanks very much for your help.

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By geoffmw
29th May 2011 15:35

Of course

Now that thesituation re Directors loan has been changed the weigh up is between 1producing accounts toclose of trade and reclaiming Corporation Tax re terminal loss and the cost of the fees for getting there.

Bearing in mind what you now describe the company coulds be struck off once the tax refund. is received. Of course accounts will need to be filed at R of C until that has happened.

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