Co ceased trading in less than one year

Co ceased trading in less than one year

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I am writing is to enquire about my friend's company. He used to run a small pizza and kebab shop using a newly incorporated co but has sold it off in less than a year.

I helped him incorporate the company and its anniversary will be in Mar 2007. But now that he's stopped trading, can I just dissolve the company and not file anything with the companies house and the Inland rev? Or do i have to do a final accounts for him and file it as if its still active? He does not intend to keep the company now that he's got a full-time better paying job.

Can anyone please advise?
Jeannie Tan

Replies (5)

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Euan's picture
By Euan MacLennan
01st Nov 2006 15:11

Need accounts for Revenue
You do not need to file accounts at Companies House and you can apply to them on form 652A to have the company struck off, but the Revenue are likely to object if you have not sent them a Company Tax Return with a set of accounts to establish any corporation tax due. So, you will need to prepare at least a P&L account for the Revenue.

When you say he "sold it off", I am assuming that you meant the business of the shop rather than the shares in the company (in which case, preparing accounts would not be your problem).

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By Paul Soper
02nd Nov 2006 00:07

Euan!
If he "sold it off" how did he sell it off? The question suggests that the business was incorporated so the business didn't belong to him to sell, it belonged to the company. This is a typical use of a company as a convenient envelope whilst ignoring the real legal significance of the transactions that took place. I hope Jeannie has reviewed her PI cover recently! This is a can of worms and no mistake.

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By Paul Soper
02nd Nov 2006 19:15

Who is selling what?
Your original question does not make it clear who owns what and who is selling what.

You say you helped him incorporate the company which HE used to run a small pizza and kebab shop... but now that HE's stopped trading... has sold IT off in less than a year.

It is perfectly possible to run a trade through the company whilst retaining individual ownership of the premises, but with all due respect it's not the question you asked.

Can he just walk away from the company? Of course he can't if he is going to remain within the law. Assuming he filed a CT41G and notified HMRC about the commencement of the business within 3 months they should already have issued a CT603, or be about to issue one, requiring a return to be filed, or did you/he forget to do this as well? Not file anything with companies house - why do you consider that to be possible??? Dissolving the company without filing - just how does that work then?

Is it because like many who don't understand that a company is actually a separate legal entity from its shareholders, and its directors, you don't appreciate that you cannot simply discard it like a used envelope when it is no longer useful.


If you call yourself a qualified accountant I

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Euan's picture
By Euan MacLennan
02nd Nov 2006 11:04

Am I being naive?
Paul

My answer was based on a limited company operating the trade and then, the company selling the assets of the trade to a purchaser - with the afterthought that perhaps the friend may have sold the shares in the company. Both of these are legal procedures. You obviously suspect a different set of circumstances!

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By jeantanmc
02nd Nov 2006 11:49

Am I the one who's naive?
Thanks for your comment Euan, and yes, he is selling the biz and not shares.. I hope this isnt really a can of worms that I've opened.

Anyway, since we're on the topic, cant a person buy a lease for a restaurant in his personal capacity but incorporate a one owner/director company to run the business? If yes, then surely that person can sell the lease (assuming permissable by landlord) and close down the restaurant, thus rendering the company redundant? Paul?

J

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