Client's company struck off

Client's company struck off

Didn't find your answer?

Hi all

I have just had a client call telling me his company has been closed by Co's House without his knowledge. It was opened in August 2013 and no accounts had yet been filed.  Am I right in assuming that I still have to submit accounts to HMRC for the period? And also that there is no need for abbreviated accounts?

Replies (27)

Please login or register to join the discussion.

avatar
By bernard michael
30th Mar 2015 11:50

"Without his knowledge" What

"Without his knowledge" What happened to all the Cos House warning letters.

If the Company has been struck off there is no need to prepare or file any accounts with anybody unless the client wishes to restore the company, which is a different series of questions

Thanks (0)
By johngroganjga
30th Mar 2015 11:58

But no accounts can yet be overdue for a company incorporated in August 2013, unless it changed its accounting reference date to shorten its first accounting period to end on 31 May 2014 or earlier.

Leaving that aside, I agree with the above response about what needs to be done now.  That is nothing unless and until the company is restored to the register.

So your first duty I suppose is to advise the client on whether it is in his interests to get the company restored. The depends largely on what assets the client will lose if he does not. 

Thanks (0)
avatar
By Kady
30th Mar 2015 12:36

Thanks for your comments.  I

Thanks for your comments.  I assume that the client didn't see any warning letters, or perhaps didn't recognise the severity if he did see them, hence his shock!  As to the filing date not yet being overdue, I would agree, and the accounting period had not been shortened.

I don't know whether he wants to re-instate the company, I will ask the question.

Thanks again for your help.

 

Thanks (0)
Universe
By SteveOH
30th Mar 2015 12:54

Monitor Service

If you enrol with the Monitor Service with Companies House, you will receive an email notification of all filings at Companies House for the particular company concerned.

Too late in this case but at least you will be notified in the future if, for example, a striking off notice is sent to your client.

Thanks (1)
Euan's picture
By Euan MacLennan
30th Mar 2015 12:56

Annual Return?

Companies House may well have struck off the company because it never filed the Annual Return due at 13 August 2014.  The client probably overlooked the "urgent" reminders for that as well.

Thanks (3)
Replying to Silver Birch Accts:
avatar
By Maslins
30th Mar 2015 15:16

Annual return likely the problem, not accounts

Euan MacLennan wrote:

Companies House may well have struck off the company because it never filed the Annual Return due at 13 August 2014.  The client probably overlooked the "urgent" reminders for that as well.

This. Accounts will be irrelevant from this perspective I'd imagine.

Thanks (0)
avatar
By Kady
30th Mar 2015 13:41

Thank you both, sounds like signing up would be a good move.

Thanks (0)
By JCresswellTax
30th Mar 2015 13:57

What a shame

A company struck off without notification?

How dare they!

Your client should consider some sort of formal action against companies house for this outrage!

Thanks (1)
avatar
By bernard michael
30th Mar 2015 15:08

JC I assume that was tongue in cheek

Thanks (0)
avatar
By Patss
30th Mar 2015 15:38

Is the company director not held responsible?

I have often wondered about this. I had a recent new Ltd Co. client inquiry where I suspect they deliberately have let their new Ltd Co be struck off by not filing anything in spite of receiving reminders for Annual Returns and Accounts. My concern is that if the company has been struck off by Companies House & the tax office will not be asking for company accounts, would the company directors not be held personally responsible if they have taken out all the funds to sustain themselves without paying a single penny in corporation tax or PAYE or indeed late filing penalty or the accountancy fee?

Thanks (0)
By Tim Vane
30th Mar 2015 16:02

In theory yes.

In practice no.

Thanks (0)
avatar
By bernard michael
30th Mar 2015 16:09

Patss

For that to happen the company would have to be restored and then formally liquidated. I doubt anyone would be bothered except possibly HMRC. The procedure you outline is very common and will remain so until Cos House actually take the directors to court as they have the power (but not the inclination ) so to do

Thanks (0)
avatar
By Patss
30th Mar 2015 16:20

Really in practice these clients can just walk away? Wow, that's unbelievable. Surely they cannot keep trading like this with more than one company being formed and allowed to be struck off without any controls can they? Could this be one for suspected Money Laundering Report then?

Thanks (0)
avatar
By bernard michael
30th Mar 2015 16:30

Unfortunately it is the way. There is no criminal illegality that I'm aware of (David to advise ?). Any creditor can oppose a company being struck off but in reality it is only HMRC that does and then not always.

I'm not aware this action falls under Money Laundering legislation 

Thanks (0)
David Winch
By David Winch
30th Mar 2015 16:55

The practical reality is that there is a huge loophole through which all sorts of naughtiness can go unreported & uninvestigated.

If a person incorporates a company, uses it, files no accounts with Companies House & HMRC and then allows the company to be struck off, then most likely the authorities will assume the company never became active & no questions will be pursued & no action will be taken.

Once the company has been struck off any assets it holds will pass to the Crown & any bank accounts in the company name will be frozen.  But it doesn't take two seconds to work out how to avoid that being a problem if the company has been used by a ne'er do well.

As far as money laundering reporting is concerned, if this has been done dishonestly & deliberately to avoid liabilities to HMRC & to creditors then that would be a form of fraud which would trigger an obligation to report.

Of course if it was never the intention to prepare any accounts or returns then it is unlikely any accountant would ever have been instructed.

As has been mentioned it would be possible to restore the company & appoint a liquidator to investigate the company & wind it up properly.  But government does not appear to have the inclination or the resources to do this.

David

Thanks (0)
Replying to Sandnickel:
avatar
By Maslins
01st Apr 2015 17:05

I do think this is a serious concern.

davidwinch wrote:

The practical reality is that there is a huge loophole through which all sorts of naughtiness can go unreported & uninvestigated.

If a person incorporates a company, uses it, files no accounts with Companies House & HMRC and then allows the company to be struck off, then most likely the authorities will assume the company never became active & no questions will be pursued & no action will be taken.

Once the company has been struck off any assets it holds will pass to the Crown & any bank accounts in the company name will be frozen.  But it doesn't take two seconds to work out how to avoid that being a problem if the company has been used by a ne'er do well.

As far as money laundering reporting is concerned, if this has been done dishonestly & deliberately to avoid liabilities to HMRC & to creditors then that would be a form of fraud which would trigger an obligation to report.

Of course if it was never the intention to prepare any accounts or returns then it is unlikely any accountant would ever have been instructed.

As has been mentioned it would be possible to restore the company & appoint a liquidator to investigate the company & wind it up properly.  But government does not appear to have the inclination or the resources to do this.

David

I've seen evidence of this happening a few times now.  Problem is the more people become aware of it, the more will do it.

I fully appreciate from HMRC's perspective it can't be easy...assuming someone submits no VAT returns or anything, how can HMRC distinguish between a company that's never traded, and one that's made sales/profits of £100k+ but not reported anywhere.  Legal right to access company bank statements?  Can't see that being popular.

How else do HMRC stop this without wasting masses of resources objecting to the Cos Hse instigated wind up of '000s of companies, many of which may well have never traded or only made losses?

Seems only cost to the tax(non)payer is £15 every 18 months or so to incorporate a new company.

Thanks (0)
avatar
By Patss
30th Mar 2015 17:12

What happens though if they have been issued with an Self Assessment Tax Return and they do not complete their annual Tax Return? If someone has been self employed in the past and then started a Ltd company, they must have a UTR number. There would be SA penalties to consider. Is it just a simple matter of withdrawing the tax return or cancelling the penalties? Surely being a director of a company would in practice mean they have to complete a Tax Return. Surely the tax office would be able to see some information on the Ltd company...perhaps CIS tax deductions by Contractors and therefore object to strike off action?

Thanks (0)
Replying to OrmeGoat:
By mrme89
30th Mar 2015 17:18

*sigh*

Patss wrote:

Surely being a director of a company would in practice mean they have to complete a Tax Return.

Thanks (3)
avatar
By bernard michael
31st Mar 2015 09:25

As has been said constantly on Aweb being a director does not on its own mean you have to complete a Return.

 

Thanks (3)
David Winch
By David Winch
01st Apr 2015 10:04

See this

See THIS THREAD

Thanks (2)
avatar
By Accounting Mutant
01st Apr 2015 13:12

I wouldn't want to act for someone who had got into this position unless you engaged with the directors personally. it's no good engaging with the company to prepare any accounts or do any sort of work, as it doesn't exist to sue it in the event of non-payment. Any work in this situation should be on a paid up front basis so you don't end up working for nothing. by the sounds of it though, there's not an awful lot to do anyway. Don't worry about it. The client obviously didn't.

Put it down to experience and get your clients on a Companies House reminder service and track them.

Thanks (0)
avatar
By Gone Sailing
01st Apr 2015 14:04

Ill Conceived Companies

Gained a recent new client with a Ltd Co, formed on the advice of their friend.

Did a bit of PayPal etc.

No profit, no CT, no pay, no dividend.

Felt uneasy about preparing accounts, with the fee involved. Would have been easier to dissolve the company?

Integrity:  Dissolving a "live" company vs charging £X00 for little purpose.  Hmmm.

Did the latter. Where is the "air cover"?

Thanks (0)
avatar
By Michael C Feltham
01st Apr 2015 16:32

Hard Won Advice:

ONLY take instruction for new limited company clients where and when the directors are prepared to provide Personal Guarantees, which are both Joint and Several, for fees incurred!

We have suffered two specific cases of such: in the first, the main director (Father and Daughter) owed over £1,000 in fees (Quite some years back): building contractors, with, thanks to myself, a large tax rebate on CIS, for which they issued a mandate for HMRC to repay to the practice.

Rescinded that mandate (No one including HMRC advised us), collected the tax rebate and immediately thereafter, applied to Co's House for the company to be struck off.

I pointed out to Co's House, the directors had lied outright on the Striking Out declaration as they stated "No Debts"! Company's House were wholly unconcerned and were not prepared to take any action.

In the second, the directors, who owed fees of over £1,200, had traded for three years; and suddenly decided to go in another direction. Once again, they failed to advise Company's House of significant debts, which included our practice and indeed, HMRC!

Simply lied on the application: neither Company's House nor HMRC were interested to pursue.

 

Thanks (0)
avatar
By bernard michael
01st Apr 2015 16:38

If you were aware of this you could have filed an objection @ Cos House and blocked the dissolution. Everyone needs to keep a tight watch on debts due by ltd cos in case of dodgy directors

Thanks (0)
avatar
By Gone Sailing
01st Apr 2015 16:40

Didn't I read recently ....

That there is a general election soon, promises of £5bn raised from tax avoidance, someone should tell them ..

Thanks (0)
avatar
By SXGuy
01st Apr 2015 17:09

Seen it before
Had a new client recently come to us after receiving letters from Co house saying their company would be struck off if they did not file their accounts. They had left it for nearly 2 years to find an accountant and even then their attitude to getting it sorted asap was shocking. Luckily for them we filed short of 2 days before any action was taken

Thanks (0)
avatar
By Gordon Frew
02nd Apr 2015 10:55

It is bizarre

I had a client who was a solo jobbing Corgi engineer & plumber who should never have been a limited company in the first place. After about 3 years of late lodgings with Companies House, despite regular professional kickings from myself, he found himself in the position of having no corporate debts, not even HMRC, apart from good old Companies House looking for about £1800 in penalties.

Indeed, he was getting house visits from Sheriff Officers who had problems differentiating the personal from the corporate. But I digress. Advised him to reregister with HMRC as a sole trader and apply to have the company struck off.

Moral question...when the only creditor is Companies House, do you have to inform them separately of the proposed striking off application? Or not, as they know already.

Probably more fun to inform them again.

Anyway, the application went through without a hitch. The client is now a contented sole trader and Companies House have written off £1800.

Now why would they do that, do you think?

The system appears to be primarily designed to raise money for the Exchequer and, secondly, to try to maintain the integrity of the register.

Unfortunately, as others have said, it is wide open to abuse.

 

 

 

 

 

 

Thanks (0)