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Closing a company

Closing a company

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Following a commercial change, we want to close an SME that we have. We still have balances though with clients and we are not expecting that those will be paid before we close the company therfore we would like to transfer those balances to a new company that we will form.

How do you transfer those balances to the new company ? What paperwork do we need to prepare ? 

Can all type of balances be transfered such as interco balances with the mother Co ?

Thank you ! 

Replies (13)

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By zebaa
10th May 2022 18:49

Will the customers be happy to pay another company ? While this could be done it may not be the best way to go about things, given the lack of background information. Is this part of a group ? You mention 'Mother company'.

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Replying to zebaa:
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By cathycat
10th May 2022 18:51

yes it is part of a Group , and it should not be really relevant for the clients to pay one entity or the other ...

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Replying to cathycat:
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By Leywood
10th May 2022 19:14

'Should not be relevant'. What gives you that impression?

Its a legal question.

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Replying to cathycat:
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By David Ex
10th May 2022 20:20

cathycat wrote:

yes it is part of a Group , and it should not be really relevant for the clients to pay one entity or the other ...

Seriously, if that’s your belief you really need to take some professional advice. Surely a group of companies has an accountant - internal and/or external. And, as others have commented, there are legal issues.

EDIT: Last year, you were paying someone’s ACCA fees. Have you asked them?

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By Eighties Kid
10th May 2022 19:02

Sounds like a sizeable business so why would you take advice from an Internet forum?

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By Tax is always taxing
11th May 2022 08:11

What's your rush? Why don't you just stop trading the company, collect the debts and then close it down?

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VAT
By Jason Croke
11th May 2022 08:35

Might be VAT issues to consider as well?

It is the sort of question that needs more details before anyone can give decent answers.

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Replying to Jason Croke:
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By cathycat
11th May 2022 16:07

Good point too Jason, although there is no UK VAT ( or foreign) for the considered service. Phew ...

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By johngroganjga
11th May 2022 08:52

As others have said, it will be much simpler to wait until all the debtors have been collected before closing the company down. However, if you really want to do it the other way round take proper legal advice first on what your position would be if any of the debtors needed to be sued to make them pay. Could they be sued if the company they originally owed money to no longer existed? What legal steps are necessary to transfer the right to sue to another company?

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Replying to johngroganjga:
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By cathycat
11th May 2022 16:05

Good point John, thanks

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
11th May 2022 09:31

I would have thought you would need an assignment document. Best to speak to a solicitor.

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Replying to Insolvency Practitioner:
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By cathycat
11th May 2022 16:43

Thank you Lisa , this is helpful

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By Calculatorboy
11th May 2022 10:35

All parties will need to enter a novation agreement

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