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Putting a company back on register to restate accs

Putting a company back on the register to restate accounts

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We have a client (company A) that has sold their goodwill / client book but are being paid in stage payments, the final instalment is due late next year and is being paid into a different company (company B) owned by the owners of the first company, the owners of company A wish to strike this off now and account for all taxes and settle all debts and wind the company A up, saves various costs. The final payment is contingent on business levels, client retention etc, it is circa £150k , if the final payment turns out to be significantly less than £150k is it possible then to reinstate the company and restate the tax and then strike it off again.

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By ireallyshouldknowthisbut
24th Nov 2020 11:23

You could do that, but surely it would be much cleaner to just leave it alone and amend later on, and then wind up.

You cant do a DS01, so it would need to be a formal liquidation anyhow which sounds expensive option, and wont require restoration etc.

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By Truthsayer
24th Nov 2020 11:26

Whether that is possible or not, I'm not sure, but it really sounds daft. It would be vastly easier just to not strike company A off in the first place.

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By Paul Crowley
24th Nov 2020 13:40

If co A has sold, and no longer exists, why should buyer pay anything?
Most daft idea I have heard in a long time

£13 fee to file confirmation statement. What other costs are there? Bank charges?

EDIT
Do we really need to look at all OPs prior questions to get context of current question?

I'm out

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Replying to Tax Dragon:
By ireallyshouldknowthisbut
24th Nov 2020 13:21

ah, my bad its one of those.

At no point is the correction option "Sub out to someone who knows what they are doing" ever an option in these type of scenarios.

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By CW2012
24th Nov 2020 11:48

To tidy up a few loose ends, the director , share owner applied via a DS01 to strike the company off last month, I am tidying up the last set of accounts, the value of two of the stage payments is known, one received, one in transit, the last one due next year is as yet uncertain as it is contingent on various performance factors and will be paid to a different company (B), the company (A) wont be staying active whether I like it or not.
My question is, could I reinstate company A if desired and restate the capital gain, get a tax refund on the difference and close it down again, yes it costs a bit but if the tax difference is sizeable the economics may stack up. Is this an option.

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Replying to CW2012:
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By Tax Dragon
24th Nov 2020 12:05

Why would it get a tax refund? I thought you signed off on the last question with the view that the profit or loss (as calculated for tax) had been passed to parent.

(I'm not saying I agree with that view; just that I thought that was your conclusion.)

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By CW2012
24th Nov 2020 12:12

Hi, I might have confused this a bit, the profit has been calculated in company A but the cash is being paid into company B, the final payment is due next year and will go to company B, currently company A hasn't reduced its estimated gain / profit from sale of its asset as two payments have been , will be paid in full, the third one maybe not, the question is can I reawaken company A and recalculate the profit and request a refund of tax already paid.

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Replying to CW2012:
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By Tax Dragon
24th Nov 2020 12:18

I understand the question. I challenge its premise.

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Replying to Tax Dragon:
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By Tax Dragon
24th Nov 2020 12:20

To expand, the company has already disposed of its right [if it ever had any] to the future proceeds. It has no asset remaining.

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By CW2012
24th Nov 2020 12:27

Company A is paying the proceeds to Company B by way of a dividend, B owns A , A's profit is now reduced by a clawback, the profit is in A. B has had no interaction over the sale of the asset, it is simply receiving the proceeds albeit via a dividend with the physical funds being paid directly into B's bank account. This wasn't my idea, its a structure that has been knitted together through necessity.

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Replying to CW2012:
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By Bobbo
24th Nov 2020 12:38

Should Company A really be paying a dividend based on contingent, uncertain future proceeds?

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Replying to CW2012:
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By Tax Dragon
24th Nov 2020 12:38

Well that cannot be quite right. Who would dispose of a company that was due to receive proceeds of £150-£200k but as yet had not received them?

And it's not what you said before, which (IIRC) was that the right to receive the proceeds had been passed to B.

But I am confusing matters. I don't know the answer to your question, but from what you say, there's nothing you can do to prevent the situation arising. So I'd merely ask that you come back again next year and let us know if it was in fact possible.

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By CW2012
24th Nov 2020 12:46

Thanks Tax Dragon, there have been some changes forced onto me, I had originally planned a post transaction valuation check, get it agreed with the HMRC and away we go, this got shelved, so I am reacting to facts as they stand. Hopefully the final payment is pretty much what it was expected to be and nothing more needs saying, if not then I suppose we will have to find out then.

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Replying to CW2012:
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By Tax Dragon
24th Nov 2020 12:54

CW2012 wrote:

...if not then I suppose we will have to find out then.

(only I don't think you will.... your double entries in B will give you a profit or loss in that entity, surely? What will you be doing with that?)

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Replying to Tax Dragon:
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By CW2012
24th Nov 2020 13:01

B has received a dividend, the profit sits in A, its the change in proceeds as recorded in A that may or may not provide a problem, and the world has enough problems right now, so lets hope that this isn't an extra one.

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Replying to CW2012:
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By Tax Dragon
24th Nov 2020 14:39

I'm not going to argue. (And I'm out after this.)

I would simply ask: what did the dividend that B has received comprise? Without seeing the paperwork, I don't know (hence not arguing). But it sounds rather like the right to the future proceeds. And that sounds rather like an asset (one that you said you were going to do a CG34 for). Hence sounds rather like the profit (or loss) on that asset sits with B.

What the tax consequences may be was what I thought your previous threads were about.

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By CW2012
24th Nov 2020 14:59

Sadly things got shifted around a bit and its ended up as a dividend, which represents the remaining balance of everything transferred out of company A including the as yet to be received cash ie the debtor

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Replying to CW2012:
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By Tax Dragon
24th Nov 2020 15:34

What you call a debt(or), I call a right to receive money. As an accountant, you'll recognise it as an asset, whatever specific name we give it.

Now I really am out.

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