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Closing down a small limited company

Guidance sought on distributing small balances from solvent PSC no longer needed

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We set up a company in 2015 for my wife to provide services as a contractor, this activity ended last April and she is now employed again.  We would now like to have this company struck off.  I have researched as widely as I can - I am an ACA but have never dealt with this procedure and whilst I can understand what the law says I want to make sure I implement it correctly. My wife and I jointly own the company, she is director and I am secretary.

The company's year-end is 31 July and its activities ceased on 31 July 2020.  Since that date there has been no income and no employees, the only transactions are for bank charges in August.  The final VAT return has been submitted and settled and the registration cancelled.  Payments of PAYE/NI are complete and corporation tax for the year ended 31 July 2020 has been settled.

There is just under £1,000 left in the bank account.  Based on what I have read I believe we should pay a final dividend equal to the retained profits and then return the £2 share capital, clearing the bank account, which can then be closed.  We can then apply for strike-off.  The only interested party as far as I can see is HMRC but I am not sure of the best mechanism to make them aware.  We did have an auto-enrolment pension arrangement with Nest but as all payments have been made and they know we no longer have any employees I am not sure whether they also need to be informed.

I am aware that all distributions need to be made before striking off commences.

I would be very grateful for any tips as to whether my approach is correct.

Replies (8)

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By Truthsayer
15th Mar 2021 12:00

'The only interested party as far as I can see is HMRC but I am not sure of the best mechanism to make them aware.'

Write them a letter. You seem to have got everything else done right.

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RLI
By lionofludesch
15th Mar 2021 12:10

To be honest, the chances of your letter reaching the fella who decides whether or not to object to the striking off are slim indeed.

Whilst I wouldn't discourage you from writing if you wish, I wouldn't bother myself. They aren't creditors and you've no obligation to write. If they object to the striking off, that's the time I'd write.

For £1000 max, I doubt if HMRC would pursue this very far - even if there were any debts.

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By Gone Sailing
15th Mar 2021 16:56

I have a standard letter to HMRC, basically to put CT processes on hold .....

".... has stopped trading and will be struck off in due course " (or going dormant)

HM Revenue & Customs
Corporation Tax Services
BX9 1AX

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By Paul Crowley
15th Mar 2021 22:31

Agree all above
Just empty the bank account and request strike off

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By Albert Fishwick
16th Mar 2021 09:16

Thank you for all of these replies. It's re-assuring to know that my brain is still reasonably functional!

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By wingman22
16th Mar 2021 09:48

I would advise HMRC regarding the cessation of trading and the proposal to strike the company off. Whilst not strictly necessary as they are not a creditor it may stop future requests for returns and fines being levied for non submission. Although these will obviously not need completing once the company is dissolved it saves the hassle of filing irrelevant paperwork.

Have a think about run off insurance cover if appropriate - some professions / industries require this to be maintained for a couple of years.

Other than that just close the bank account, file the DS01 and move on.

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By Albert Fishwick
17th Mar 2021 11:26

Thanks again. Run-off on PI cover is certainly an issue - there is a massive mismatch between what the professional body wants and what the risk really is but if there are ongoing premiums these can be met personally.

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By Mr_awol
17th Mar 2021 12:04

You say the only transactions since trading ceased are august bank chugs which suggests that the reserves were already nominal and as such you haven’t dividended them down to this level. You do however plan to take one final divi of £1k

If that’s the case you may have a choice of dovi or capital distribution for the £1k. Which way you go may depend on whether your wife has other dividend income (or included other gains) in the relevant tax year. If none and none then it doesn’t matter much which way you go

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