Closing down a Limited Company and start trading under a new company.

I suspect this question will open up a hornets nest of contention, with regards to ethics but here we go anyway!

My client is a small limited company (t/over under £150k) and VAT registered in the construction industry. He was taken to court by a prior customer and lost the case owing £3k in damages and legal fees. His financial year has just ended (october) and he has just filed a VAT return (unpaid due Dec). His only creditor is the bank to whom he owes £15,000 on his overdraft. He has approached me to ask whether he would be able to dissolve the company and write off the debts (including the corporation tax due for the year ended and the VAT). He would then look to start up a new limited company and commence trading as before with the slate wiped clean.

Before anyone says it, this is a hardworking chap who doesn't own his own property (only business assets are his work van) and lives a very modest lifestyle. His business has taken a beating in the last couple of years from competitors who massively underquote for work and go bankrupt halfway through. He is not trying to dodge paying his dues (he has always paid corporation tax and VAT for his business and personal tax where applicable), he simply cannot pay his debts.

Please could someone advise whether it would be feasible for him to take this course of action and any potential issues that may arise, with regards to starting up a new limited company. None of the company debts are secured against his personal assets (frankly he has none apart from a modest car).

Thanks in Advance.

SD

Comments
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problem

Tosie |

Bank

wilcoskip |

Accounts for year just ended

Sir Digby Chicken Caesar |
Sir Digby Chicken Caesar's picture

Set up the new comany now and

bduncan |

Yes it's possible.

Monsoon |
Monsoon's picture

how much are we talking about here

carnmores |
carnmores's picture

VAT TOGC

carnmores |
carnmores's picture

carnmores

Sir Digby Chicken Caesar |
Sir Digby Chicken Caesar's picture

If he can't make the company

Bob Long |

Causing a recession?

chatman |

it appears that the bank o/d

carnmores |
carnmores's picture

Bob Long

Tosie |

@ Bob Long

Monsoon |
Monsoon's picture

You should file the accounts

nasirs |

cease trading

The Black Knight |

Lots of options for the "hard working chap" but ...

dwgw |

the ethical thing to do ?

The Black Knight |

Morals and ethics

Monsoon |
Monsoon's picture

I'm inclined to agree that,

dwgw |

@monsoon

accountant_87 |

They do

The Black Knight |

The Facts re the legal case

Sir Digby Chicken Caesar |
Sir Digby Chicken Caesar's picture

teentsy idea

abelljms |
abelljms's picture

Not so strange up North

ShirleyM |
ShirleyM's picture

Sir Digby - thanks for the

dwgw |

just go ahead with the dissoloution

carnmores |
carnmores's picture

Interesting insight

bon_baker |