Cessation accounts and DLA in credit

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Hi, sorry if this is small potatoes but thanks in advance for any advice.

I'm helping a friend with admin to close down a two person company that never really got off the ground.  Would appreciate some advice on how this should be approached to make it as straightforward (and inexpensive) as possible.  I understand that accounts need to be submitted to HMRC before applying for strike off. 

The bank account is zero and there are no creditors other than £500 owed to one of the directors in the Directors Loan Account.   There's 2 x £1 unpaid share capital.   

Does this mean the company is technically insolvent and to avoid this should the director consent to write off the loan?  I think this will result in a profit as the company hasn't traded recently.  There is a trading loss brought forward from the last accounting period so could it be offset against that and what should happen to the £2 capital?

Thanks

Replies (11)

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RLI
By lionofludesch
30th Apr 2020 17:04

No, it's just a bad debt. If the director doesn't expect to collect, forget it.

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By Sjrsjr
01st May 2020 19:21

Thanks for the reply. So really there's no difference between cessation accounts and annual final accounts (other than a date)?

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Replying to Sjrsjr:
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By Tax Dragon
02nd May 2020 08:45

I think Lion's point was more that there's no difference between the debt to the director and any other business debt.

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Replying to Sjrsjr:
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By Tax Dragon
02nd May 2020 08:46

No need to say that twice.

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RLI
By lionofludesch
02nd May 2020 09:11

My point is ......

Who are these accounts for?

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RLI
By lionofludesch
02nd May 2020 09:12

No need to say that twice either

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By Sjrsjr
03rd May 2020 23:42

Who are the accounts for? HMRC.

My question was whether, if the director waives the debt thereby creating a profit, the trading loss carried forward from the previous year could be offset against it.

If it doesn't create a tax liability, the director would prefer to close the company without showing any debt.

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Replying to Sjrsjr:
RLI
By lionofludesch
04th May 2020 04:05

Sjrsjr wrote:

Who are the accounts for? HMRC.

My question was whether, if the director waives the debt thereby creating a profit, the trading loss carried forward from the previous year could be offset against it.

If it doesn't create a tax liability, the director would prefer to close the company without showing any debt.

As the company hasn't traded for a while, I suspect that it may not be able to use its brought forward losses against this new "trade" and the director may end up paying for his pride.

Who is he trying to impress? HMRC ? They won't care.

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By Sjrsjr
04th May 2020 21:25

Thanks, and apologies that the question was too difficult for a technical answer.

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Replying to Sjrsjr:
RLI
By lionofludesch
04th May 2020 21:37

Difficult?

Not really.

Difficult to understand, perhaps.

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Replying to Sjrsjr:
RLI
By lionofludesch
04th May 2020 21:38

Duplicate

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