How to dissolve a company and claim ER

How to dissolve a company and claim ER

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We have a client who is sole director/shareholder and wishes to close his company. He ceased trading >3 months ago.  A letter has been sent to HMRC (as in the old style ESC16 clearance letter) advising that cessation accounts will be prepared and a CT600 submitted. This should be finished in the next week. Apart from HMRC all creditors have been paid off. There is a balance in the bank account of about £20k

To claim ER we are saying that the company is buying back the shares for the equivalent of the value left in the company. Ordinarily on a share buy back I would be looking to prepare a special resolution and send a copy of it together with form SH03 to CH

For the winding up of a company I would normally have a minuted meeting of the directors and a resolution passed to dissolve the company, and then send a DS01 to CH

What is the procedure for closing the company when you want to claim ER

Most especially

  1. At what point can the director empty the bank account and close it down
  2. What resolutions need to be passed by the directors
  3. What forms/resolutions need to be sent to CH
  4. In the case of a company which has money left in the bank and the director wishing to claim ER do I need to send anything other than a DS01 to CH
  5. Should any advance clearance be obtained from HMRC under CTA 2010 s.1044
  6. Is there anything else I should do

In the case of a company which has slightly more left in the the bank - say £30k. What should the directors do to reduce this amount to <£25k without risking it being added back and needing the services of an Insolvency Practitioner - salary? dividends? pension payt?

Many thanks

 

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By Adam12345
24th Oct 2016 15:45

Firstly, before you close the company down, make sure that you have made the payments to the shareholders, as once the company is closed, the bank will freeze the bank account of the company, and you will not be able to access the funds.

HMRC will allow payments made of £25,000 or less on winding up to be treated as a capital disposal, if the payment is greater than this the whole amount will be treated as a distribution.

If the amount is greater than the £25,000, you can appoint a liquidator, which will be expensive, but any payments from the company, after the liquidator has been appointed will be treated as a capital distribution.

As far as I can remember, entrepreneurs relief is claimed on the self-assessment itself.

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By Ruddles
24th Oct 2016 17:11

Why are you even thinking about a buyback? Pay the man, strike off the company, job done.

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