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How can you close down a limited company real fast?

My friend have a Limited Company since 2009. For 2 years, 2009 and 2010 the company has been dormant. He opened an on-line website to sell products to customers.
 
Some customers paid by phone with stolen cards for some products from the on-line website and now Streamline (the card processing company) sent him a charge back for those money because the real owner of the card complained that he did not authorise any transactions. The real problem is that the cards used in the process were Corporate cards from USA and the customer asked for the products to be shipped to UK. So, in this case, you can not expect that the delivery address will be the same with the address where the card is registered.
 
Because this friend of mine does not have this amount of money, and the products are shipped already, can he close down the company real fast and avoid that charge back. Of course he does not want to declare the company bankrupt because this will affect his personal credit status and maybe he wants to open another company in the future.
 
The company is not VAT registered. I was trading in the last 3 months. There are no assets, but there are under £1,000 in the company's bank account.
 
 
Can somebody please advise, if he can close the company down and how to do it in a legal way, fast and without complications? 

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By twj4789
04th Aug 2012 06:58

No
You can't just close a company, it takes about three months and the directors are obliged to write to any known creditors to notify them. Even if you did dissolve the company a creditor like streamline could have it reinstated and then take recovery action.

On a slightly more positive note it is unlikely a company going into liquidation would effect your friends personal credit rating as a limited company has a seperate legal identity.

Your friend needs to ensure he has acted fully within the law as a director and continues to. He should seek an accountants or insolvency practitioners advice urgently as burying his head in the sand is unlikely to work!

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By Tosie
04th Aug 2012 07:22

May solve itself

You say your client only has a £1k in bank and no other assets so that is all streamline can recover.

So don't panic and I make sure all accounts and annual returns are up to date.

 

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By JC
04th Aug 2012 10:17

mmm ....

This is an interesting one - the crux of the matter is that delivery under all circumstances MUST BE to the cardholders address; otherwise their is no trail to follow

If one was going to commit credit card fraud then the following may be one way to do it

setup a limited companysetup an ecommerce sitepurchase credit card lists & addresses from the internetset up a number of 'drop' addresses throughout the UK

That is the setup - now the operation

have products at a sensible price break level (i.e. not all carmeras @ £1,500 - but rather £200-£350)use a number of internet cafe's or public wi-fi spotsuse the fraudulent credit cards to purchase goods from the ecommerce web siteuse the 'drop' addresses all over the UK as delivery addresses

Result

the company makes ecommerce sales & gets the proceedsthe company also gets the goods back because they are picked up from their 'drop' addresseswin .... win .... all round - get payment & goods - good result

When the time comes for chargeback - disolve company - easy!

Of course it is time dependant but on a large enough scale within a limited timeframe you could clean up

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By twj4789
06th Aug 2012 10:42

Good point JC

I hadn't looked at it like that. I was initially suprised that Streamline didn't hold a "deposit" to allow for chargebacks.

I've been involved heavily with three web-based companies and for an initial period all the sales processing companies (paypal, google checkout, barclaycard, hsbc merchant services etc..) either held a percentage of the sales or retained the funds for 30-45 days before making it available to the company.

Lastly to the question - the company is likely to have some assets, this could be the website, stock or outstanding director's loan account. Make sure everything is tidy and do seek some advice asap.

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06th Aug 2012 16:25

now the biggest issue

What is happening with the telephone contract like Vodafone, Orange...?

Bank accounts?

 

When this must be closed. As I know he is still having a mobile telephone contract on the LTD.

 

Or you just send them a letter saying that the company is closing down and after 3 month of non trading you just send a letter to HM Revenue cu close the company down?

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By twj4789
06th Aug 2012 17:24

Seek advice

Sorry to repeat but you really need to seek advice. You are obviously very concerned for your friend, if it is causing them serious distress it would be worthwhile and could be kept to a minimum cost.

Without seeing agreements from anyone you have a contract with I don't believe you can receive apporpriate advice. There could be director's guarantees with streamline and vodafone etc.

Providing there are no director's guarantees, the £1k cash is the company's only asset and the company is up-to-date with its statutory filing then as Tosie said there is no need to worry.

 

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By JAADAMS
06th Aug 2012 17:38

Article on this subject

I covered the procedure for cessation /liquidation of a company in an article at the end of last year -

'Liquidation' Get the details right' .

The link is below...

http://www.accountingweb.co.uk/article/end-company-part-two-get-details-right/522047 

... but twj4789 is right - best to get professional advice

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10th Aug 2012 15:28

Seek advice
If you, or your "friend", want this to be done correctly, you, or rather they, MUST seek the advice of a licensed insolvency practitioner NOW. This has to be handled correctly or whoever is responsible, be they a named director or a shadow director, will face potentially serious consequences - credit card companies quite rightly come down very hard when or if they suspect fraud may be an issue. You need to deal with this NOW.

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10th Aug 2012 17:53

Who wrote this illiterate stuff?

The "Friend" was an idiot who, if the story is true, did not use standard safety procedures when dealing with credit cards, and he now wants to "Screw" the card companies.

Tough, the company is insolvent, with all that follows.

all "Friend" may do is tell the creditors and let one of them wind up the company. Clearly "Friend" does not have the funds to pay an insolvency practitioner.

This kind of person gives crooks a bad name.

- and so to bed...

 

 

 

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