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.
- Overpaid In Employers NI - RTI EYU for hundreds of employees 49 1
- Stumped - IHT 61 2
- Leaving the VAT FRS Scheme or trying to stay as long as possible? 394 6
- No PAYE Registration but need auto enrolment 458 11
- Tips on meals 108 1
- HMRC now overriding SA bank repayment details on tax returns 1,273 33
- Credit management tools 92 1
- Rental losses on jointly owned property 85 2
- property capital gains 89 1
- Write an article on latest tax changes for landlords. 763 20
- Incorporate to utilise dividend allowance next year? 356 7
- CGT and primary residence 137 1
- Marriage Allowance 228 3
- Private doctors - Ltd company vs partnership 1,136 12
- S455 and February year ends 298 7
- HMRC having technical difficulties 866 18
- Closing down loss-making company 438 5
- S.455 Tax again 282 3
- New Build 335 2
- Taxation of sinking fund contributions 375 4