Wind up of company

Wind up of company

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We have a client company currently with a 31 March year end. The trade ceased in February 2012 and the company distributed the balance of funds to the sole shareholder by 29 February (ESC C16). I am currently preparing final accounts to 31 March for submission to HMRC after which the company will file with Co Hse to be struck off. There is no corporation tax liability but I understand that under ixbrl accounts require to be filed with HMRC. I would be grateful for advice on the accounting entries to reflect the capital distribution to the sole shareholder. There is also the possibility of changing the year end to 29 February but this still requires the accounting treatment to reflect the fact that at 29 February the bank account was nil and the shareholder had received the final distribution as a capital payment. All comments welcomed

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John Toon
By John Toon
16th Mar 2012 14:57

No need to show capital distribution

Prepare cessation accounts upto the 29th Feb, don't change the year end as you are striking off the company and don't need to submit to Companies House.

There is no need to show the capital distribution, but if you must it is a dividend in specie.

Submit tagged accounts, comps and returns to HMRC - job done!

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Replying to carmenfer:
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By [email protected]
28th Mar 2012 13:12

Treatment of Share Capital when winding company up.

Hi

I have a very similar situation to the one here in that I am winding a company up that has been trading for less than a year and paying a capital distribution. My question is how do you treat the £100 share capital at the end? Do you leave it or do you reverse the journal ie. Cr Bank and Dr Shareholder

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Teignmouth
By Paul Scholes
16th Mar 2012 15:05

Has HMRC had/approved the ESC C16 procedure?

Hi - depending on the circumstances HMRC may sometimes not need accounts to cessation, so if you've applied for ESC C16 and HMRC have OKd it then, chances are they are not expecting any accounts.

In similar circumstances we would always write an explanatory letter to HMRC saying that the company had little if any trade in the period and no CT liability so would HMRC allow strike off without the cost of a final set.

If you are forced to do it then I'd make the accounts up to cessation (no need to do a change of year end form) and put the final payment to directors' current account, making a suitable note in the director's transaction note.

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