I would like to ask experienced Accountants who are willing to share their knowledge what is the proper procedure of closing a company with over £60K in the bank. All debts for the company are paid including all taxes, the PSC is owned by a qualifed Accountant who has been doing some freelancing in the City and now wants to close the company for good because of IR35 rules. What is the proper procedure to close such a company as the person has no experience in that area and wants to pay very minimum tax. What is the correct procedure as the money is over £25K and the next year end for the company is 31/03/2020, she was thinking of transferring all the cash to herself ashe director as capital distribution, close the bank account and then inform HMRC. Is this the correct procedure?
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It is a ‘correct’ procedure but probably not the most tax-efficient. I would suggest that paid-for professional advice is in order. Only when all circumstances are known can the best route be established.
An MVL might be the better route and if the client can claim entrepreneurs relief it may also be the most tax efficient.
They will need a licensed Insolvency Practitioner for an MVL.
Based on £60k it will cost about £2.5-£3k plus VAT (VAT is usually recoverable if Co. was VAT registered) for Liquidators fee and expenses, usually mitigated by the entrepreneurs relief..
Why close it immediately? By the sound of it there is no urgency in that the company appears to now be dormant. Explore the possibility of taking the money out over 3 years as dividends as an alternative strategy