winding up a company

winding up a company

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A company has ceased to trade and has very little in the way of assets. Accounts are due to be drawn up, and corporation tax will be due. Can the bank account be cleared out before the accounting date, leaving the director to pay the tax, in order to prevent more bank charges. Otherwise the company would not be dormant. I've not done this in practice before and obviously want to prevent the need for producing more final accounts.
Jonathan

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Euan's picture
By Euan MacLennan
24th Jun 2006 16:58

Striking off
If by winding up, you mean that you are are going to apply to Companies House on form 652A to have the company struck off, you do not need to file any further accounts, not even the ones you are about to preopare. However, you will need to submit accounts covering the final period of trading with a Company Tax Return to the Revenue to determine the tax liability and also, to satisfy them that no further tax is likely to be obtained from the company so that they will not object when the Registrar publishes notice of his intention to strike the company off.

You might wish to apply to the Revenue for clearance under ESC C16 for the final distribution to be subject to CGT, rather than income tax. See Nichola Ross Martin's recent article.

That said, it is not a bad idea for the director to take the money out of the company sooner rather than later - if there is any money in the bank account when the company is struck off, it will be frozen and it may help to have made an early distribution if the Revenue tries to contend that business asset taper is not due because the company has been an investment company since it ceased trading.

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