Close LTD co with just over £25k retained profits

Can you still go down the informal strike off route with slightly over £25k in retained profits?

Didn't find your answer?

Hi. Apologies if this is a very basic question. 

I am about to close down my LTD company which has around £25.5k in the business account. My accountant said that I can claim the £25k is a capital distribution whilst paying 10% CGT under BADR. They told me the remaining amount could be issued as a paper dividend. I'm a bit nervous about the potential for HMRC to turn around and say it all has to be a dividend due to exceeding of £25k limit.

Could someone please confirm if this is an acceptable way of doing this. I have tried to do my own reseach online and everything points to going down the MVL route if the £25k limit is exceeded. Perhaps I can make a contribution to my SIPP or donate the excess to charity instead?

Replies (13)

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RLI
By lionofludesch
07th Jan 2023 12:35

£500 ?

Pay yourself a £500 wage for the admin work you've done.

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Replying to lionofludesch:
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By NoIdea123
07th Jan 2023 12:39

Thanks for suggestion. Should have mentioned that the company hasn't traded for a while. Kept open to see about potential to trade again but it's not going to happen. PAYE scheme has therefore been closed.

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Replying to NoIdea123:
RLI
By lionofludesch
07th Jan 2023 13:01

Open another PAYE scheme ?

Spend £500 on accountancy advice ? Or some other expense ? It won't be tax allowable but so what ?

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By David Ex
07th Jan 2023 12:51

Happy to provide a written opinion for £500 - job done.

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Replying to David Ex:
RLI
By lionofludesch
07th Jan 2023 13:02

Damn! That route is no longer open to me.

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By Tax Dragon
07th Jan 2023 13:18

I suggest giving £501 to a Yorkshire-based charity. They might need it more there than in the rest of the kingdom.

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By GHarr497688
07th Jan 2023 16:30

Surely you would spend £500 on some business expense like wages or fees that will then reduce your net worth to under £25000 - seems like an odd question to me .

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By Truthsayer
08th Jan 2023 09:19

Your accountant knows the full situation (likely including many relevant facts that you have probably not stated here), so why do you not trust his opinion?

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By jvenegas16
08th Jan 2023 13:41

Can you not take a dividend of £2,000 tax free? And the year after strike off the company with the balance as distribution?

Certainly, we do not have all the details. Is the money in the bank also the net value on the balance sheet? Or are there assets to be disposed off, or any outstanding debt with creditors?

If a a members voluntary liquidation (MVL) procedure is not used, this would be classed as dividend income.

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Replying to jvenegas16:
By JCresswellTax
09th Jan 2023 10:16

No, this isn't an option.

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Replying to JCresswellTax:
By Ruddles
09th Jan 2023 15:46

It is indeed an option. Although not necessarily the best option. (Depending on the circumstances, it could be.)

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
09th Jan 2023 09:26

It's not worth washing it through an MVL.

I suspect the accountant would charge £500 to finalise and lodge all final tax returns etc which will bring the company under the de minimus.

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
09th Jan 2023 10:22

FYI To wash it through an MVL will probably cost in the region of c£2k.

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