Spongebob or IP?

[Wantinglegaladvice]

Ltd company ceased trading mid-November due to a major client leaving a no new work materialising. Currently has zero cash in the bank.

My accountant is currently in the process of putting together the latest set of accounts and has informed me there will be an overdrawn DLA of around £40k but had reserves of £35k which will be declared as a dividend. This leaves a £5k overdrawn DLA.

Company has £1k outstanding in VAT and a car lease via VWFS with two years left. Nothing is personally guaranteed. VWFS have chased for an update but I'm hesistant to reply until I know what I am doing as a way forward.

My accountant has advised I personally fund an IP but I don't have the means to do so which would be 3-5k I believe.

Is the Spongebob plan suitable for this scenario? I have zero assets, the company has zero cash. Can I write to the creditors inviting them to wind it up or should I apply to strike the company off? Are HMRC likely to object to this/what are the consequences?

Thanks in advance. Very stressed about it.

 

[UK Contractor Accountant]

Is corporation tax up to date?

I would wait to the final accounts are to hand showing the actual distributable reserves available for dividend payout & your current overdrawn DLA balance.

Not sure if your Acccountant is aware that any lease payments due but not yet paid at cessation should be accrued as a final expense in the last trading period.

 

[Wantinglegaladvice]

The car lease is paid via my directors loan account to avoid BIK tax, not sure what impact that will have?

 

[Wantinglegaladvice]

And yes, no outstanding corporation tax. What will happen to tax on any profit due between the last period and strike off?

 

[UK Contractor Accountant]

The car lease is paid via my directors loan account to avoid BIK tax, not sure what impact that will have?

whose name is the lease contract in - the company or personal?

 

[Wantinglegaladvice]

whose name is the lease contract in - the company or personal?

Company

 

[UK Contractor Accountant]

Company

then should be down as a company cost.

the remaining lease payments to the end of the contract needs to go in the final cessation accounts.

I assume you are not going to personally pay money into the company to cover the remaining lease payments due?

If you cant afford an IP then the best advice would be just apply for Strike off after the final accounts have been produced and filed with HMRC together with the final corporation tax return. The ball will then be firmly HMRC's court on whether to let strike off proceed or raise objections.

 

[bovine]

What advice have you had about paying for the company car from your dla avoiding bik? Because you paying the invoice amount doesnt mean its your car, its still a company car and bik still applies. It may reduce due to personal contributions (i cant remember the calculation, its been a while since i looked at it), but it doesnt automatically exempt it.

As UKCA says above , best to strike off. Its unlikely anyone will deem it worthwhile to do anything else with it due to the low amounts involved.

 

[DWS]

The car lease is paid via my directors loan account to avoid BIK tax, not sure what impact that will have?

How does that avoid a BIK?

 

[Wantinglegaladvice]

Do final accounts need to be filed with HMRC? Filing those would surely show a 37k dividend being paid out to HMRC to reduce the DLA and I'm not sure how that will sit with them?

 

[WaveJumper]

Yes I was wondering that re the car, I thought unless it was a designated a pool car, or strictly kept at the business premises at night and weekends, insured only for business use etc etc, one would struggle to prove to HMRC BIK was not applicable ........ but then again I ma not a clear accountant

 

[DWS]

Do final accounts need to be filed with HMRC? Filing those would surely show a 37k dividend being paid out to HMRC to reduce the DLA and I'm not sure how that will sit with them?

The accounts need to be finalised before dividends can be issued, if HMRC do not receive the accounts then they are likely to object to strike off as they will not know if they are owed money, dividends can only be issued after taking debt into consideration.

 

[Wantinglegaladvice]

The accounts need to be finalised before dividends can be issued, if HMRC do not receive the accounts then they are likely to object to strike off as they will not know if they are owed money, dividends can only be issued after taking debt into consideration.

And they object and then what? Unless I personally pay there is zero money in the business to file final accounts. Unless they choose to wind it up it presumably will just sit there until strike off.

 

[DWS]

And they object and then what? Unless I personally pay there is zero money in the business to file final accounts. Unless they choose to wind it up it presumably will just sit there until strike off.

But the Company does have assets, according to your OP, in November the Company was owed £40k in an overdrawn DLA.
HMRC may object to the strike off but in the end it will probably go through, but that is the chance you take, you will still need to write to all creditors telling them your intentions to dissolve the Company before submitting the DS01.

 

[Lisa Thomas]

If there is an o/s o/d DLA then you could look to pay the balance in installments, which might just about fund a CVL.

Happy to explore options with you - feel free to dm me.