Company overdue but wants to be struck off

Company overdue but wants to be struck off

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We have a client who's accounts were due to be filed by the end of September this year. It does nothing, there are just a few expenses. Client doesn't want the company anymore. Can we just apply to have it struck off without any problems and not file the December 2013 accounts and avoid the fine. There are losses brought foward so there won't be any loss to HMRC.

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By johngroganjga
21st Oct 2014 17:21

Yes but you are doing things in the wrong order, so HMRC may well object.

The right order is to get everything up to date and straight with HMRC, then apply to strike off (after having removed all the assets and paid all the external creditors of course). 

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By 0098087
21st Oct 2014 17:31

Well there are no assets and no creditors. However if we file with HMRC can we then strikeoff without filing with Companies House and incurring the fine?

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By johngroganjga
21st Oct 2014 17:34

Yes if you close off the risk that HMRC will object then you can proceed.  If the accounts have already been prepared that is the obvious thing to do.

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By petersaxton
21st Oct 2014 17:42

Trading

If you tell HMRC the company has not been trading since the last accounts and doesn't intend to do so in the future it may help.

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By zebaa
21st Oct 2014 20:17

Depends on what your interest is.

If it is a client you want to make money from then try writing to HMRC. They will reject anything other than the accounts, of course, but if the object is fee generation, that's the way to go. If you are late they will issue penalties on the company, so either get them in - charging, of course - or have your arguments why not marshaled . Make sure your agreement with the client covers time spent ( and is not fixed price, say).

Or, if you want to act in the client's best interest,  tell them to resign as director and let companies house strike it in the fullness of time.

Like I say...depends.

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By petersaxton
22nd Oct 2014 02:28

Ignore zebaa

Why would HMRC reject anything other than the accounts if the company is not trading?

Why would Companies House strike off a company if HMRC expected accounts to be submitted and objected?

Resigning as a director is not the best advice.

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By zebaa
22nd Oct 2014 17:16

Why...

Peter, I will try and answer your questions.

HMRC will give a standard response to any letter seeking to do what thew OP desires and simply reject any alternative course of action to submitting accounts. If your question is why do HMRC do this, you may be best asking them.

Why would Companies House strike off a company if HMRC expected accounts to be submitted and objected?

As you know companies house & HMRC are not one and the same: they have differing objectives. Although they will not strike a company if HMRC object they will make as many attempts as it takes. Sooner or later HMRC get the picture and do not object.

While my original post was somewhat tongue-in-cheek, the advice offered contrasts the lengthy by-the-book way, with another, which is easy & equally legitimate.

 

 

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By petersaxton
22nd Oct 2014 17:36

I disagree

<<<HMRC will give a standard response to any letter seeking to do what thew OP desires and simply reject any alternative course of action to submitting accounts. If your question is why do HMRC do this, you may be best asking them.>>>

My point is that HMRC will not reject any alternative if you tell them you have not been trading.

<<<Why would Companies House strike off a company if HMRC expected accounts to be submitted and objected?

As you know companies house & HMRC are not one and the same: they have differing objectives. Although they will not strike a company if HMRC object they will make as many attempts as it takes. Sooner or later HMRC get the picture and do not object.>>>

What's the picture? HMRC should always object. If they don't that isn't a reason for anybody else to collude in wrong doing. Accountants shouldn't advise their clients to break the law.

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By zebaa
22nd Oct 2014 17:57

break the law?

Let us be quite clear here Peter. In the situation as outlined in my posts, what law would be broken?

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By petersaxton
22nd Oct 2014 18:42

Avoiding paying corporation tax

Or do you think that the law doesn't require you to pay corporation tax that is due?

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By zebaa
22nd Oct 2014 20:00

@Peter

In my earlier post I asked a question, about your statement concerning the law. You chose not to answer.  Instead you ask a further question of your own, about a situation I have never proposed, nor suggested. But to avoid any doubt - if any CT is due the company should pay.

You may find it helpful to re-read the post from the start, to refresh your memory of what the problem is. As it hint, it was not about CT.

Now, let us have no more diversions, please answer the question I posed. What law would be broken?

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By petersaxton
22nd Oct 2014 21:21

What do you mean?

The laws that are broken are the laws that require you to pay your taxes.

What is the point you are trying to make?

 

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By 0098087
23rd Oct 2014 13:03

there will be no tax loss to hmrc

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Replying to johnhemming:
By petersaxton
23rd Oct 2014 14:23

In the OPs situation

0098087 wrote:

there will be no tax loss to hmrc

I agree but I thought we had strayed into the general situation at some point.

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By zebaa
23rd Oct 2014 17:03

@ Peter again - please READ, then comment.

 

In response to:

------

The laws that are broken are the laws that require you to pay your taxes.

What is the point you are trying to make?

------

Paying tax was never the issue. You seem to have become confused - please read the OP & responses fully. Third time of asking: In the situation as outlined in MY posts, what law would be broken?

 

 

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By petersaxton
23rd Oct 2014 17:16

You are getting silly now

I've explained and if you don't accept it then fine.

 

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By zebaa
24th Oct 2014 00:22

What ARE you talking about?

Peter you - yes you - made the comment about CT, which simply not at issue. READ the opening question, for goodness sake before saying anything else. You might as well have commented on the price of fish for all the sense it made. You have not been able to back up your first comment, despite me asking three times. Enough said.

 

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By petersaxton
24th Oct 2014 04:58

Are you still going on about it?

I've made it clear that - seeing as there's no tax involved in the OPs case - it's not an issue in the narrow circumstances relevant to the OP. I thought the debate had strayed into the wider realm of Companies House striking off companies when there was  tax outstanding. I was referring to that. If you don't want to discuss that then fair enough. I don't see why you are still ranting about it.

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By petersaxton
24th Oct 2014 05:01

Why I disagreed with zebaa

zebaa said: "If it is a client you want to make money from then try writing to HMRC. They will reject anything other than the accounts, of course,"

They wont reject anything other than the accounts. If you write to them and tell them the company is not trading they will not ask for a tax return.

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By JCresswellTax
24th Oct 2014 09:28

5am?

Could you not sleep because of this debate Peter? ;)

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By petersaxton
24th Oct 2014 10:11

It seems so

But in fact I just got up early.

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By zebaa
24th Oct 2014 16:09

Ahh...Peter

NOW you have made it clear you thought - wrongly - the debate has strayed. It had not.

Okay, lets see if I can pull some more teeth. The company has expenses so the question 'is it trading' becomes an important point. This, coupled with the fact that time is short, compound the problem. In general, HMRC are not well known for a speedy reply to a letter.  

So the OPs client has two choices. One, he has his accountant - the OP - write to HMRC seeking, in effect, an exemption to file accounts. Then, IF such a letter is obtained the company can be closed, without objection. If the reply is either delayed or a negative one, then the company will have penalties to pay. We are not told how much money the company has in the bank, but it may well be very little. Unless the director makes a loan to the company, which he will never see repaid, penalties & fines will start to pile up.

Or, the director can just resign.

Is this a difficult choice? 

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By petersaxton
24th Oct 2014 16:33

My view

You write a letter saying the company has not traded and, unless there is evidence to the contrary, HMRC accepts it.

I would never suggest you should leave a company without a director. What is the advantage?

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By TerryD
24th Oct 2014 17:24

Strictly speaking....

If the sole director resigns, the company is in breach of its statutory obligations and the members then have a duty to appoint a replacement. If they don't, any interested party can petition the Secretary of State who will then direct the members to make such an appointment.

Also, resigning as a director does not  absolve one from still being legally responsible for wrongful acts or omissions occurring before resignation.

Whether the above points really matter is, of course, highly debatable. Nevertheless, some accountants still feel uneasy about advising clients to commit a potentially wrongful act.

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By zebaa
24th Oct 2014 17:32

A short list of advantages

Here is a short list of advantages:

Not dependant on HMRC accepting no accounts need to be submitted.

No delay in waiting for a letter.

No need to loan the company money to fund penalties / fines / further costs.

No accounts for the director, or rather the ex-director, to file ( for expense see above, further cost).

 

 

 

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Replying to Clinton:
By petersaxton
24th Oct 2014 17:57

Spurious "advantages"

zebaa wrote:

Here is a short list of advantages:

Not dependant on HMRC accepting no accounts need to be submitted.

No delay in waiting for a letter.

No need to loan the company money to fund penalties / fines / further costs.

No accounts for the director, or rather the ex-director, to file ( for expense see above, further cost).

Sending a letter to HMRC will mean not tax return is needed. Accounts are always needed if there's a company. Unless it has been struck off.

No need to wait for a non-existent letter.

No need to loan the company money.

If there's no director then accounts still need to be filed.

 

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By zebaa
24th Oct 2014 19:11

@TerryD

While the Secretary of State can so direct the company and its officers, I do not think I have ever seen such an action, just the standard Co Ho letter. Have you?. in the case of there being no officers there only remains the company - in a case like this, an empty shell. It is an important point that the law says 'the company', not the shareholders. There is a difference. The consequences are the company is dissolved, which is the objective in resignation.

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By zebaa
24th Oct 2014 19:16

Perhaps you may care to explain, if accounts are always needed if there's a company (to quote from your post) why write a letter - as you suggested - in the first place ?

If the director does not loan the company money how will it pay its penalties & accountancy costs ?

Quote 'If there's no director then accounts still need to be filed'. With the consequence of them not being, that the company is dissolved. Is this a difficult concept ?

 

 

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By petersaxton
24th Oct 2014 19:35

Easy

1 You are getting confused between HMRC and Companies House.

2 What penalties?

3 The company will not get dissolved if HMRC don't know that there's no tax return due because they will object. You seem to struggle with every concept.

I don't know why your mind is in a jumble but I would suggest that the best thing to do is to change the ARD by one day and then decide what is best. I would suggest that a letter to HMRC saying they have not been trading. Then you can dissolve the company rather than resigning as a director.

Have you actually ever told HMRC that a company is not trading? If so, did they ever query it?

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By zebaa
24th Oct 2014 21:26

Read the original post Peter

In response

1 Eh? How so ? Oh, never mind, let's try & concentrate on the problem as posed by the OP.

2 Sigh. The penalties which will be due if or when the accounts are filed. See the original post, first line.

3. Ah...I see, you don't understand what happens. Sooner or later Co Ho dissolves the company, but it does not matter when because there is no director - no one to pay penalties & fines nor to issue sanctions against.

Last line: It is the OP that is asking for advice, not me. I am sure what I would do in the situation described. Peter, you really should read what has been written, both by yourself and others, to refresh your memory.

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By petersaxton
24th Oct 2014 21:49

I see what's going on

There's another similar question on Any Answers and I got confused between the two.

I still don't agree with your idea for the director to resign. They will still be responsible for what went on or didn't go on before.

If they don't want the company then what I would do is the following:

Write to HMRC and say that trading ceased on a certain date.

Then apply for the company to be dissolved.

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By User deleted
24th Oct 2014 21:51

To the OP

1. If the client doesn't want the company and it hasn't traded then you could apply for strike off provided you comply with s.1004

2. Once you have applied for strike off within 7 days you will need to provide a copy to those listed under s.1006

3. A creditor here includes a contingent or prospective creditor under s.1011 which means a copy must be sent to HMRC as well.

4. It is HMRC practice that where a tax return has not been filed they do object to the strike off. So if the company's status with HMRC is not 'dormant' then it is advisable to file a NIL return as well.

 

 

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