Hopefully the question says it all. Company is set up, funded by a director's loan. It is loss making for nearly two years. Director decides enough is enough and sells off remaining stocks. No other assets to speak of and all liabilities paid up. Remaining bank balance cleared by director and offset with DLA.
Everything seems clean enough, except there is still an amount owed to the director after all of this.
Digging around in the back of mind I think the correct treatment is to write back the DLA to profit (probably as other income) in the stat accounts. However I think this should be written back out again on the tax comp.
Can anyone confirm this approach is correct? If so where on the tax comp is it written back?
Thanks in advance.
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Replies (2)
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Why are you preparing accounts?
If the director has decided that enough is enough, he will presumably be applying to Companies House to have the company struck off. If so, Companies House will not want any more accounts or Annual Returns filed.
If you have already prepared accounts for a year including the cessation of trade, HMRC will not be interested in any further accounts showing just the final mopping up transactions.
If you have not yet prepared accounts to cessation of trade, HMRC may well require those accounts, although they may well be prepared to forego them if you write a nice letter to say that having made losses for two years, the company has ceased to trade and there is no prospect of any tax being payable, so would they please not object to the proposed striking off.
If HMRC insists on accounts to the cessation of trade, I would simply leave the DLA and any other balances outstanding in the accounts.
In response to Euan, I'm preparing them as they are the accounts to cessation of trade (which was a couple of weeks before the end of the financial year), and they are due with Companies House on Thursday. The client paid by SO so all paid for, they just got round to getting me the info recently.
I agree maybe it wasn't necessary but given the deadlines, and HMRC might want accounts to cessation of trade anyway, it seemed easier all round to do them, do the CT600 and then start the dissolution process in Feb!